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SEWOL DISASTER: Korean banks under scrutiny for loans to ferry owner
Publication Date : 19-05-2014
Banks that were key financial sources for Yoo Byeong-eon, the owner of the sunken ferry Sewol, may be held accountable for their lax loan management.
Of the 374.7 billion won (US$366 million) that Yoo’s affiliated companies borrowed from financial companies, 90 per cent was received from banks, according to the Financial Supervisory Service.
The list of lenders includes 13 commercial banks, 11 credit unions, two credit finance providers and one savings bank, among which Woori Bank lent the most - 92.6 billion won.
The Korea Development Bank, the Industrial Bank of Korea and Kyongnam Bank came next with 61.1 billion won, 55.4 billion won, and 54.4 billion won respectively.
The state-run Korea Export-Import Bank, another major state-run bank, loaned 1.1 billion to one of Yoo’s subsidiaries.
The top four lenders - Woori, KDB, IBK, and Kyongnam - were already facing a special probe by the FSS on allegations that they laxly provided loans to Chonghaejin Marine Co., the financially pressed operator of the ferry Sewol.
The FSS said it would expand the investigation to all banks that have had transactions with Yoo to determine if they neglected their supervisory duties.
“The loans may have been legitimately approved, backed by sufficient collateral and within the loan amount limit, but as (the Sewol sinking) led to various financial doubts, the FSS decided to look into the matter closely,” said an official.
The financial watchdog thus hinted that the listed banks may face sanctions for slack loan approval.
The Financial Consumer Agency, a private think tank, also said in a statement that the role of banks, especially state-run ones, is not just to approve loans but also to make sure that the loaned money is used properly.
Yoo’s family members and close acquaintances have so far been revealed to have founded or operated some 70 companies, including Chonghaejin Marine Co., the financially pressed operator of the ferry Sewol.
The prosecution summoned Yoo for questioning but has yet to determine his exact location, leading to speculations that he has already fled abroad. Yoo’s sons and daughter, too, have so far evaded the investigators’ call.