Court Ruling Corners Samsung
By Kim Rahn
Staff Reporter
A Seoul court ruled in favor of creditors of the now-defunct Samsung Motors, ordering the former unit of the nation’s largest conglomerate to repay 2.3 trillion won in overdue debt to creditors in the nation’s biggest civil lawsuit ever.
In the high-profile ruling, the Seoul Central District Court Thursday ruled Samsung must sell non-listed shares of its life insurance unit to repay part of the debt owed to creditors. The ruling is the latest in a series of blows to Samsung Group, which is already undergoing a special investigation into a bribery scandal, and the aftermath of the nation’s largest oil spill in the southwest sea, for which it has been blamed.
The creditors ― 14 financial organizations including Seoul Guarantee Insurance ― filed the suit in 2005 against Samsung chairman Lee Kun-hee and 28 Samsung affiliates, demanding they repay 5 trillion won in debt.
Samsung Motors applied for court receivership in 1999 before French automaker Renault SA took it over. To waive the debt, Lee gave the creditors 3.5 million non-listed shares of Samsung Life Insurance valued at 700,000 won per share, under an agreement that the shares would be listed by the end of 2000.
But the listing did not take place, and the creditors, unable to sell the stocks and recoup their losses, filed the suit. They demanded the 2.45 trillion won in principal and 2.28 trillion in interest.
``Those Samsung affiliates are still obligated to dispose of the shares that the creditors are holding and repay the debt,’’ the court said in the ruling.
But the group will have to reimburse the 2.3 million in shares, not the original 3.5 million, as one of the creditors sold the rest. The court also reduced the interest rate of the debt from 19 percent, which the creditors claimed, to 6 percent, according to the Commercial Law. Thus, the total repayment will be some 2.3 trillion won _ 1.6 trillion won in principal for the 2.3 million shares and its interest.
Samsung claimed the agreement was made under unjust pressure from the creditors and is thus invalid. But the court rejected the claim, saying the group benefited from the agreement.
Samsung said it would make a statement about the case after reviewing the ruling. Considering the huge amount of money involved, it is forecast the group may appeal.
Samsung has been under pressure in recent months, with a series of accidents and scandals smearing the image of the nation’s largest conglomerate.
It is being investigated by an independent counsel for its alleged slush fund creation and bribing of public officials, while Samsung Heavy Industries has also been denounced for causing the oil spill in seas off Taean, South Chungcheong Province, which occurred when one of its barges crashed into an anchored oil tanker.