By Kim Rahn
Chonghaejin Marine, the operator of the sunken ferry Sewol, and its sister companies are increasingly facing the risk of bankruptcy as banks are likely to refuse to roll over loans made to them.
Civic groups have also launched boycott campaigns of their products.
According to the Financial Supervisory Service (FSS) and banking industry sources, Friday, creditor banks for Chonghaejin Marine and its sister firms may demand repayment of the loans, while not offering fresh ones.
The firms are owned by Yoo Byeong-eun, former chairman of the now-defunct Semo Group. Although the group went bankrupt in 1997, Yoo and his family members created the ferry firm and a dozen other companies here and control them through a complicated cross-ownership structure.
Three of the firms, Chonghaejin, Chonhaiji and Ahae, borrowed more than 66 billion won from five local banks and Seoul Guarantee Insurance. Of that figure, they have to repay 4.4 billion won to the state-run Korea Development Bank (KDB), the main creditor, by the end of May.
The FSS said Yoo’s 13 companies borrowed more than 200 billion won from banks, savings banks, credit unions and consumer finance companies.
As questions are being asked about whether the huge loans extended to the Yoo family were proper, the KDB and other creditors are promising a tough stance against Chonghaejin Marine.
Chonghaejin and its sister firms would come under court receivership if they fail to repay the debts.
Some parents’ groups are boycotting products of the Chonghaejin-related companies, including English book importer and publisher Moonjin Media.
Moonjin was established by Yoo’s second son who also established Kim & Johnson, a bookstore chain for English books. Chonghaejin and Chonhaiji are connected to the company through cross-shareholding.
Parents’ groups are demanding Kim & Johnson and other bookstores not to sell books published by Moonjin Media, threatening boycotts if they do.
In the meantime, the FSS has expanded its investigation into Chonghaejin Marine’s suspicious foreign exchange deals to all the related companies and the Yoo family.
“We are examining whether the family used the companies illegally in buying and investing in overseas assets. We are also looking into whether the family had unlawful foreign exchange deals when setting up and operating overseas companies,” an FSS official said.
The FSS also launched special inspections into four banks, the KDB, the Industrial Bank of Korea, Kyongnam Bank and Woori Bank, that offered more than 90 percent of the total loans offered to Yoo’s 13 domestic companies.
“We’ll review whether their loan-review processes and risk management systems were proper,” he said.
The National Tax Service and the Korea Customs Service also started inspection into allegations that the companies hid assets and evaded taxes.