Paintings involved in savings bank scandal to be auctioned off
By Kim Da-ye
For art collectors, April 3 should be marked on their calendars.
At the Grand Hyatt hotel in Hong Kong, Seoul Auction, Korea’s largest auction house, will be hosting its 2012 Hong Kong sale.
The lineup of the paintings at the sale is impressive; it include Zhang Xiaogang’s Bloodline series, Zeng Fanzhi’s Trauma series and Chen Lianqing’s Flooding the Forbidden City No. 10.
A total of 14 paintings by established Chinese painters and an American artist are scheduled to be auctioned off, Seoul Acution’s website shows, although its public relations official said the house hasn’t decided on the final composition of the lineup.
A sudden release of many artworks by celebrated painters into the market may intrigue art collectors. In fact, they used to belong to Busan Savings Bank and its affiliates as security for loans.
They are part of 91 artworks confiscated by the Korea Deposit Insurance Corporation (KDIC), which is in charge of returning savings to depositors when the financial institutions can’t.
Busan Savings Bank and its affiliate Daejeon Mutual Savings Bank were suspended back in February 2011 by the Financial Services Commission (FSC) because of capital inadequacy caused by the financing of failed projects.
As KDIC needs more cash to pay out to the depositors, it decided to auction off the artworks. The book value of all 91 artworks is 10 billion won, but Yonhap News Agency said that they would be in reality worth up to 200 billion won.
The tales of immorality at Busan’s management shocked the nation. Part of their rampant frauds involves many of these paintings, which have ironically been drawn by Chinese artists advocating morality.
The central figure of the fraud is Kim, a 32-year-old son of Kim Min-young, the president of Busan 2 Savings Bank and a major shareholder of Busan Savings Bank. He ran the Chang Art Gallery in southern Seoul and Beijing, China.
To finance his purchase of paintings, the son couldn’t directly borrow from Busan and its affiliates because financial institutions cannot lend to direct family members of major shareholders.
He instead set up a paper company in which a former public relations manager of Busan Savings Bank became the chief, according to various media that cited the police as the source.
The name of that paper company was Watergate Gallery. Chang and Watergate used the same office.
With 23 artworks put up as collaterals, Kim’s son managed to borrow 36.23 billion won from Busan Savings Bank and its three affiliates. The husband of his wife’s sister is the president of Busan Savings Bank while that president’s friend heads another affiliate, Jungang Busan Savings Bank.
The same artworks were used as collaterals multiples of times during the process of his borrowing from the four banks in numerous transactions.
In case of Zhang Xiaogang’s Bloodline, Kim’s son used a copy to borrow before he obtained the original.