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Watchdog widens probe in all affiliates of Sewol operator

2014/04/25 14:02

SEOUL, April 25 (Yonhap) -- The South Korean financial watchdog is widening its special probe to include all parties in the labyrinthian link of companies and their affiliates that had a hand in operating the ill-fated ferry, while the investigation was unveiling a former businessman with a questionable past and wealth shielded from public scrutiny.

The Financial Supervisory Service (FSS) has been looking into details of overseas transactions and other money activities by the ferry operator Cheonghaejin Marine Co. and Yoo Byung-eun, a former chief of Semo Marine Co. that was the predecessor of the operator, as well as his two sons.

According to the officials, the watchdog is including Cheonghaejin Marine's parent company, I-One-I Holdings Co., and other affiliated companies in investigating cross-border transactions.

"We decided to look into all companies and people involved in the Sewol and its operator," said an FSS official.

Along with the FSS, the national tax agency and customs bureau are looking at possible tax evasion and illegal overseas investments.

The 6,825-ton Sewol sank on April 16 while heading to the southern resort island of Jeju from the country's western port, carrying hundreds of high school students on a field trip. The death toll has exceeded 180, with some 120 people still missing. Around 476 people are believed to have been aboard the vessel.

As the country was tracking down people and the failed system responsible for the disaster, investigators were led to Yoo and his family who controlled the ferry operator Cheonghaejin Marine through stakes connected through a series of affiliates.

Yoo's first son Dae-kyun holds a majority stake in door-to-door sale company Dapanda Co. and Chonghaejin Marine, while his second son Hyuck-ki owns some 10 percent stake in Ahae Corp., a paint manufacturing company, and Ahae Press Corp.

At the same time, the two children are the biggest shareholders of I-One-I Holdings, which owns stakes in Chonhaiji, a shipbuilding unit, which in turn owns about 40 percent of the ferry operator Cheonghaejin Marine.

The watchdog believes that this cross-web investment circle helped the family manage and control the entire group of companies, some of which are being blamed for the deadly sinking of Sewol.

Yoo and his family are estimated to own at least 240 billion won in assets such as stocks and properties as well as a number of assets in foreign countries, including five mansions and luxury apartments in the United States.

I-One-I Holdings is known to have at least 13 unlisted firms under its wings, with tens of overseas units in the U.S., France, Hong Kong and other countries.

Yoo's eccentricities have also been a fodder to the media amid public outrage at the family's link to the ferry operator.

Yoo and his father-in-law established the Evangelical Baptist Church (EBC) in 1962, regarded as unorthodox by the Christian community. Thirty-two members of the church who believed in doomsday committed group suicide in 1987 under mysterious circumstances. Yoo was convicted on fraud charges and served a prison term but was cleared of any wrongdoings in connection with the suicides.

After retirement, Yoo, now in his 70s, turned to professional photography under an alias "Ahae." He held exhibitions in the U.S. and at the Versailles in France, earning him the title "reclusive billionaire photographer from South Korea" by overseas media.

Yoo has said through his attorney earlier this week that he shares the responsibility for the Sewol accident, but refuted all allegations of illegal transaction and tax evasion.



(Notice) Corrections and Official Statement by EBC

*Pursuant to an order by the Press Arbitration Commission, we have been asked to publish the following statement from the Evangelical Baptist Church (EBC).

Evangelical Baptist Church ("EBC," the "Salvation Group"*) and Mr. Yoo Byung-eun Related Corrections and Official Statement by EBC

After the April 16, 2014 Sewol ferry tragedy, the media published a flood of indiscriminate articles regarding the EBC (also known as Guwonpa* in Korean) and Mr. Yoo Byung-eun. Due to the immense volume of articles, it is impossible to correct and counter every single one. Therefore, in agreement with the EBC and the surviving family of Mr. Yoo Byung-eun, we are publishing the following combined corrections and Official Statement by EBC.

* This label, which is translated as the Salvation Group, has been applied disparagingly to the Evangelical Baptist Church

The majority of the media reported that, as the owner of the Sewol ferry, Mr. Yoo Byung-eun directly managed Chonghaejin and its affiliated companies and that he used operating funds for personal purposes. However, Mr. Yoo retired from his executive management position in 1997. He did not own any shares in the noted companies, nor had he managed operations, nor used the operating funds for personal reasons. He was not the owner of the Sewol ferry, nor the Chief Executive Officer of Chonghaejin. As such, he had not provided any directives in regards to the overloading of the Sewol ferry or its renovation (e.g. expansion of the cabins and cargo area).

Although some media outlets reported that Mr. Yoo Byung-eun had established favorable relationships by paying bribes to politicians, Korean Prosecutors' Office verified last October that reports of such bribery activity were false. We hereby correct all articles pertaining to this matter.

The majority of the media reported that Mr. Yoo Byung-eun was a wealthy billionaire who owned real estate properties, including Geumsuwon, both in Korea and abroad under other people’s names and that he diverted the tithes and offerings made to the EBC to an illicit fund and expanded his businesses.

The EBC has confirmed that reports of his wealth incorrectly included real estate properties owned by farming associations, which had been established by church members. Thus, these reported properties were not held by Mr. Yoo Byung-eun in another person’s name, but are owned by the noted farming associations. Additionally, Mr. Yoo did not embezzle from the EBC nor did he expand his businesses by diverting tithes or offerings of the pertaining church and its members into an illicit fund.

The EBC has stated that Mr. Yoo Byung-eun was not a religious sect leader. Although he was ordained as a pastor in the 1970s by missionaries at the Far East Broadcasting Company, he did not serve as a pastor. There is no pastor in the EBC, since it is a congregation of laymen.

It was also verified that Mr. Yoo Byung-eun did not participate in the official

process to register EBC as a church in 1981, nor had he been revered as a religious sect leader or been made into a God-like figure by the pertaining church or its members.

The majority of the media reported that the EBC is a religious cult and that it preaches doctrines that are not consistent with Christianity. There are certain churches in Korea that call the EBC a cult, solely based on differences between their and the EBC’s doctrines. However, the EBC has affirmed its belief in the Bible, the Trinity, Jesus’ conception by the Holy Spirit, His birth, death, and resurrection. The EBC does not worship a particular individual as a religious sect leader or preach any doctrine that contradicts the Bible.

It was verified that the captain and the crew members who abandoned the ship at the time of the Sewol ferry accident are not members of the EBC. Only two people have been confirmed as members of the EBC: the late Jeong Hyun-seon, who died while evacuating passengers and thus was designated a national hero, and another person, who had been rescuing passengers and was himself later rescued in an unconscious state. It has also been verified that the EBC does not own any shares of Chonghaejin and that it did not engage in its management. Furthermore, the EBC has stated that Lee Yong-wook, a senior Coast Guard official, has not attended the EBC for the past 15 years.

The majority of the media reported that Mr. Yoo Byung-eun attempted to flee the country by ship, that he requested asylum in several countries but was rejected, and that he possessed firearms to protect himself. The prosecutors hastily announced without confirming the facts that Mr. Yoo Byung-eun attempted to seek asylum. However, two months later on August 18, the prosecutors revised their statement noting that “upon investigation into the identity of the caller, a person with no relation to the Salvation Group had placed a prank call.” In addition, there was no evidence of any attempt by Mr. Yoo to flee the country. It has also been confirmed that the firearms alleged to be in his possession were collectibles. Furthermore, not only were they collectibles that could not be operated they were also not in his possession while he was fleeing.

Some news articles created the impression that the EBC and Mr. Yoo Byung-eun were behind the Odaeyang mass suicide incident. Some also reported that Mr. Yoo Byung-eun had been able to rapidly grow the Semo Group in the 1980s (e.g. securing the business rights to operate the Han River Ferry Cruise) by using a connection with Mr. Chun Kyung-hwan and a close relationship with the former President Chun Doo-hwan’s Fifth Republic of Korea. However, the Odaeyang mass suicide incident was thoroughly investigated by the prosecution and the police three times—in 1987, 1989, and 1991. All three investigations concluded that the EBC and Mr. Yoo Byung-eun had no connection to the incident. Also, neither Mr. Yoo Byung-eun nor the EBC had any collusive ties with the Fifth Republic of Korea. All of this was verified in the official document issued from the Incheon District Prosecutors’ Office on May 21, 2014.

"We sincerely request of the press to serve the public’s right to know with objective and balanced reporting, guarding against biased arguments from its interviewees, all the while fulfilling its duty and responsibility to create no victims from such reporting.

We ask the press to reflect upon its manner of reporting on the Sewol ferry accident. Without waiting for the truth to be revealed through the completion of the investigative and judicial process, the reporting largely focused on releasing exclusive and sensational news reports, which led to misleading the public and essentially conducting a trial in the court of public opinion. We also ask the press to avoid compromising the democratic principles of a constitutional state and to prudently take strict precautions against those forces that aim to take advantage of this period of heartbreak for this nation in order to advance their own position and authority."