Doosan No Longer Holds onto BW Shares

Doosan Inc. announced yesterday that it would discard its 1,590,000 Bonds with Warrant (BW) (approximately worth 82 billion won, or $68.5 million) without any consideration. The BWs have been the center of a controversy. It is suspected that Doosan, through the shares, helped its owner pass down his wealth to his children.

Doosan`s decision came out in the wake of the latest moves by the prosecution to prosecute illegal practices of the chaebol. Recently, the prosecution has arrested and detained SK group`s owner Choi Tae-won. In addition, it has pronounced that it would widen its investigation to prosecute other chaebol`s illegal passing down of wealth and internal transaction between affiliates. Thus, experts interpret Doosan`s announcement as a sign of surrender by chaebol groups. They had strongly opposed Roh`s new policies against chaebol.

Even worse for the Doosan group, one of its affiliates, Doosan Heavy Equipment, is found in a special investigation conducted by the Labor Ministry, that it has illegally hindered the activities of the labor union.

Doosan confirmed yesterday, "In July of 1999, majority shareholders bought the BW shares in the market in a worry that their grip over Doosan, Inc. might have been weakened. The bear market has lowered the price for execution of the new shares. In addition, the volume of new shares has been increased, hindering the price of our stock from gaining back strength. Furthermore, ordinary shareholders may be damaged in the process. That is why we have decided to discard the newly issued shares."

Last October, the People`s Solidarity for Participatory Democracy (PSPD) alleged, in a criminal claim, that "Doosan Inc. illegally doled out for free to owner`s children and grand children 1.59 million shares of its BW stock in the overseas markets, which amounted to $100 million."

The PSPD argued, "The BW shares were attached with a re-fixing option, which Doosan hid from its investors. That way, it caused damage to the investors and tried to illegally pass the ownership down to the next generation."

Doosan asserted that it had reported the option to the Financial Supervisory Service as to the BW stock, and it had not breached any law or regulation.

Keuk-In Bae bae2150@donga.com