SK Fails to Collect On 530 Billion Won

It was found that SK Global Co. and SK Shipping Co. provided a total of 533 billion won to Asang, run by SK Chairman Chey Tae-won’s relative and failed to receive the money.

The two SK subsidiaries provided illegal financial assistance to Asang Corp. and abrogated the issued bill to conceal the matter. The suspicion about the use of money is growing because the company is veiled in secrecy.

According to financial industry insiders and accounting firms on April 20, SK Global had co-signed the payment of the plywood company at its establishment in 1978. Now SK Global has to pay the debt for Asang, whose management is seeing troubles.

SK Global, however, asked SK Shipping for help in a worry that its credit rating might fall when the guarantee of payment is revealed. In other words, SK Shipping issued 480 billion won of commercial paper (CP) and SK Global bought them to pay Asang’s debt.

SK Global recorded the money into the accounting books as a deposit, but the accounting company saw the money as a dead loan.

The money is another insolvency matter along with the 1.5 trillion won that the prosecution recently found. SK Global’s capital is currently impaired.

In the meantime, SK Shipping abrogated the CPs to conceal them, and did not talk about their use.

In addition, the SK subsidiary lent 60 billion won to Asang, yet it collected only 9 billion won and had to record 52.9 billion won with accrued interest as a loss. As a result, SK Global’s 480 billion won and SK Shipping’s 52.9 billion won flowed into Asang illegally, and the two SK companies violated obligations to announce their financial assistance to a company they had special relations with.

Asang was founded in 1978 as ‘Sun Kyoung Wood,’ changed to Woo-rim Wood in 1986 then to Asang Corp. in 1992. The company is registered as a timber company and suspended operations after the decision of a ‘disclaimer of opinion’ in a 1999 audit.

Nothing is known about Kim Duk-rim, CEO of Asang, except that he is one of Chairman Chey’s relatives.

It is notable that the company had been issued a ‘qualified opinion’ in the audit for 15 years from 1984 to 1998.

SK Group avoids remarks about Asang though SK Shipping bought Asang’s real estate for 45 billion won to 55 billion won in 1999, including land in Gangnam, Seoul.

SK Shipping might have provided financial assistance to Asang by purchasing the real estate, considering that the latter was severely cash-strapped with short-term borrowing amounting ot 355 billion won.

Do-Young Kim nirvana1@donga.com