Ferry firm's money trail traced

Financial regulators have launched a special probe into a credit union that has provided suspicious loans to Chonghaejin Marine owner Yoo Byung-eun.
At least four banks, including the state-run Korea Development Bank (KDB), are also being examined for their loans to the ferry firm and its affiliates, the Financial Supervisory Service (FSS) said Thursday.
Yoo allegedly used the money to expand his business empire which spans from media, construction and food to shipping. The other three banks are the Industrial Bank of Korea, Woori and Kyongnam.
“We are examining whether the credit union and the banks violated rules when they extended loans to Yoo’s firms,” an FSS official said, asking not to be named. “Particularly, the Semo Credit Union, was a key financing channel for his firms.”
The union’s major customers include Chonghaejin Marine, which operated the sunken ferry Sewol. The death toll from the tragedy rose to 171 with 131 still missing as of 4:00 p.m.
The FSS suspects the union also helped the 73-year-old owner create and operate a slush fund, estimated at tens of billions of won, and dodge taxes.
Earlier, the regulator said it was looking into dubious currency transactions among Yoo’s firms at home and abroad, and his overseas assets.
Yoo’s two sons are controlling a dozen firms through I-One-I Holdings. Yoo has no stake in the holding firm, but the prosecution claims he is the “real” owner.
On Wednesday, prosecutors raided Yoo’s home and the offices of a Christian cult, which he has allegedly used to attract funds and sell products. Yoo himself is a long-time member of the cult.
The religious group was involved in a mass suicide in 1987, in which 32 followers were found dead in a hidden garret in a factory in Yongin, Gyeonggi Province.
The cult and the credit union appear to be at the center of the ongoing investigation.
Yoo ran a cruise operator named Semo Marine until it went bankrupt in 1997. He was left with huge debts, however, he was able to found Chonghaejin Marine two years later, and set up a dozen more firms afterwards.
“His assets are now believed to be more than 240 billion won ($231 million),” another FSS official said. “We believe the cult was behind this successful business expansion. The credit union also appears to have played an important role.”
According to the prosecution, Yoo’s firms hired mostly the cult’s members and their sons and daughters. None of them have open recruitment programs.
Most of Sewol’s crewmembers, including the captain, Lee Joon-seok, are said to be members of the cult. Lee and a dozen other crewmembers were arrested for deserting the ship without taking measures to save the passengers.
The ferry sinking also prompted a broader probe into borrowing practices among ferry and cruise operators.
Chonghaejin Marine was able to borrow money from the KDB and other major banks when it bought used ships. KDB loaned some 10 billion won to the ferry firm.
“We are inspecting how the firm was able to receive such a large amount from the KDB,” the FSS official said.
The regulator is considering making it compulsory for banks to check passenger safety standards of ferry and cruise operators when they receive loan applications from them, the official said.
jj@ktimes.co.kr,