Hyundai Chief Sued for Damage Caused to Creditors
By Lee Hyo-sik
Staff Reporter
The state-run Korea Deposit Insurance Corporation (KDIC) has filed a suit against former executives of Hynix Semiconductor, including incumbent Hyundai Group Chairwoman Hyun Jeong-eun, and company accountants for damage caused to creditors.
The deposit insurer said Thursday that it filed the lawsuit with the Seoul Central District Court on Sept. 17 against four former executives of the country's second largest memory chipmaker, including Hyun, an accounting firm and its three accounts responsible for company bookkeeping. It is seeking 1.5 billion won in compensation.
The KDIC said the chipmaker acquired illegal loans from Korea First Bank (now Standard Chartered Bank) in 1999 by manipulating its accounting book, causing 1.5 billion won in losses from a failure to repay loans.
The lawsuit came three months after the insurer said on behalf of creditors, it would file a damage suit against the former Hyundai Group units, which failed to pay back loans.
Creditors, including Shinhan Bank and SC First Bank, had been asked by the KDIC to file lawsuits against former Hyundai Group affiliates by June 15, but they failed to do so, citing fears of losing business with the conglomerate.
``In accordance with the `Depositor Protection Law,' we are stepping in and taking matters into our own hands to retrieve public money as lenders have not filed lawsuits against companies with debt liabilities. We will challenge former Hyundai executives and others involved in illegal lending, and hold them responsible,'' a KDIC official said.
He also said Hyun, the widow of late Hyundai Group Chairman Chung Mong-hun, should be held accountable for such damages to the banks whose bad debts were bought by KDIC through taxpayers' money because she inherited the group and became the owner.
The deposit insurer also plans to seek compensation from Hyun and seven former executives of Hyundai Engineering & Construction mid-October for obtaining illegal loans from seven lenders, including Chohung Bank (now Shinhan Bank), based on falsified balance sheets in 1998. It said the construction firm failed to pay back the loans, causing losses worth 27.6 billion won.
However, Hyundai Group argues the chairwoman is not responsible as she wasn't involved in top management at the time, and since those units had been separated from the group, claims that the court will not hold her responsible for financial losses caused by former group units.
The group also said it is inappropriate for the KDIC to seek compensation from Hyundai as creditor banks have realized large capital gains on shares of Hyundai Engineering & Construction and Hynix Semiconductor as stocks have increased sharply over the past year.