Mirae Asset antitrust probe sends island development in limbo

A rendering of Yeosu Gyeongdo Maritime Tourism Complex / Korea Times file

By Park Jae-hyuk

Mirae Asset Financial Group is considering scrapping a 1.5 trillion won ($1.27 billion) project to build a maritime tourism complex on Gyeongdo, an island in Yeousu, South Jeolla Province, apparently to protest the Fair Trade Commission's (FTC) recent investigation into the company.

According to industry sources, Sunday, Mirae Asset founder Park Hyeon-joo ordered his executives at a recent meeting to reexamine the plan to construct luxury hotels, condominiums, a golf course, shopping mall, waterpark, cable car and marina on the southern island.

The order was made a few days after it was revealed that the antitrust watchdog is probing the financial company over allegations of illegally funding the resort construction project.

The FTC is looking into Mirae Asset Consulting's subsidiary, YK Development (YKD), to find out whether it illegally borrowed money from Mirae Asset Securities and Mirae Asset Life Insurance by establishing a special purpose entity named GRD. The Financial Investment Services and Capital Markets Act bans financial firms from lending money to their largest shareholders.

Mirae Asset has denied the allegation, saying the nation's four major law firms ― Lee & Ko, Bae, Kim & Lee, Yulchon and Jipyong ― confirmed that it is difficult to regard GRD as a Mirae Asset subsidiary.

Although Mirae Asset is open to all possible scenarios at this moment, the company may halt the project if it reaches an agreement with other shareholders of GRD ― BSG, Hyundai E&C and Hoban Construction. BSG is known as the largest shareholder of GRD with around a 40 percent stake, while YKD owns 20.5 percent.

Mirae Asset previously suspended the project in May, due to negative public sentiment in the region about its construction of accommodation facilities. The project resumed after the company communicated with the city's council members and civic groups there about the necessity of the facility and dispelled worries about property speculation.

But still, some of the city council members are calling on lawmakers to discuss the matter during a National Assembly audit in October. Some civic groups also held rallies to protest the project.

The Mirae Asset founder is said to have become skeptical about continuing the project, given that his attempt to develop the region has faced setbacks over the past five years.

The Gyeongdo Maritime Tourism Complex project was initially launched in 2010 by Jeonnam Development Corp., which is wholly owned by the South Jeolla Provincial Government. After the central government called for changes to the project, however, the provincial government invited domestic and foreign companies to participate in a bid in 2016.

Among the three bidders, Mirae Asset was the only Korean contender and the other two were Chinese firms.