Here is an update on the Hanjin Shipping bankruptcy, the Korean government is trying to get Hanjin’s former chairwoman to cough up more personal funds to help cover some of the bankruptcy costs:
Choi Eun-young, former chairwoman of Hanjin Shipping, kneels and cries during a parliamentary hearing Tuesday. [NEWSIS]Choi Eun-young, former chairwoman of Hanjin Shipping, refused at a parliamentary hearing late Tuesday to cough up additional funds from her personal assets to help save the world’s seventh-largest container carrier.
On Sept. 12, Choi vowed to provide 10 billion won ($9.1 million) in private funds to cash-strapped Hanjin help tide the company over during the ongoing crisis. She knelt in front of lawmakers at the hearing at the Sejong Government Complex Tuesday, when Park Wan-joo, a lawmaker with the opposition Minjoo Party, berated her.
“You dragged up Hanjin Shipping’s debt ratio from 155 percent to 1,445 percent during your term and now you are saying you cannot donate your own assets because [Hanjin Group] Chairman Cho Yang-ho has been in charge since 2014?” Park asked. “Do you think you have served your responsibility? You are supposed to be sincere when making apologies.”
“I am sorry if I appear I am not properly apologizing. I apologize from the bottom of my heart,” she said, falling to her knees and sobbing with her head down for half a minute. “But [coughing up more of my fortune] would be difficult because it may wreak havoc with the management of Eusu Holdings.”
She currently is chairwoman of Eusu Holdings, which was split when she gave up oversight of Hanjin Shipping in May 2014. [Joong Ang Ilbo]
You can read more at the link, but according to the article she is worth anywhere from $40-$180 million dollars.
It sounds like the critics of the Hanjin bankruptcy think the Korean government should have bailed them out like the US did the too big to fail banks in 2008:
A container terminal is shown above in Singapore, Sep. 3, containing seized cargo from Hanjin Shipping. Analysts say that Hanjin’s court receivership could be just the tip of the iceberg for the shipping industry as the long-running global economic downturn has left it drowning in excess capacity. / AFP-Yonhap
Hanjin Shipping’s filing for court receivership is inflicting far larger-than-expected negative impacts both at home and abroad as major routes for trade are being suspended.
The government and creditors are facing growing criticism that they are responsible for having thrown global ports and traders into confusion.
About half of Hanjin’s fleet is stuck in ports around the world as the authorities there fear the shipper whose assets have been frozen is unable to pay fees.
The government will not be able to avoid criticism for underestimating the fallout of the bankruptcy of the world’s seventh largest shipper.
It is still pondering over contingency plans to contain the backlash, creating a task force to ensure there are no delays in the flow of cargo.
The Ministry of Oceans and Fisheries will lead the task force along made up of ranking officials from nine related ministries and agencies.
“The government will make sure that the fallout from Hanjin Shipping doesn’t lead to chaos in logistics or a transmission to the real economy including exports,” said Oceans and Fisheries Minister Kim Young-suk, after an emergency meeting held Sunday.
“We will closely cooperate to support damaged industries, taking all possible policy measures,” he said.
However, officials from the shipping industry criticize the government for allowing the shipper to go bankrupt without having drawn up proper countermeasures.
The most urgent problem is that exports may fail to arrive at their final destination on time as 68 of Hanjin Shipping’s vessels are stranded at sea worldwide as of Sunday. [Korea Times]
You can read more at the link, but it is pretty amazing that a huge company like Hanjin has gone into bankruptcy. It seems like the simple answer is that another company buys Hanjin and then restarts operations with a fresh cash flow to pay the various port fees that are currently delaying shipping.
Samsung Electronics suspended sales of the Galaxy Note7 and promised to replace sold phablets with new ones at the request of customers, which could lead to the largest ever recall in the smartphone industry.
The decision came nine days after the first Galaxy Note7 melted spontaneously due to a defect in its lithium-ion battery. More instances were reported in the following days.
“We apologize for the concerns inflicted on customers due to the inconvenience caused by the burning incidents not long after the new product was released,” said Koh Dong-jin, Samsung Electronics’ mobile business president on Friday.
“As of Sept. 1, 35 cases have been reported to [Samsung] service centers in Korea and abroad. This is 24 defective units out of 1 million units. In our analysis of the cause, we have found that the problem was in the battery cell.”
The free exchanges of new Galaxy Note7s are expected to start on Sept. 19. [Joong Ang Ilbo]
Lotte Group Vice Chairman Lee In-won was found dead on a hiking trail in Yangpyeong, Gyeonggi, Friday morning, a few hours before he was to be questioned by prosecutors investigating corruption in the group.
The 69-year-old vice chairman was often described as the second-in-command of Lotte Group after Chairman Shin Dong-bin, or Shin’s right-hand man. He was the most powerful figure in the group outside the Shin family, managing all operations at some 90 Lotte affiliates.
Lee’s body was discovered lying on the ground next to a tree by a man in his 60s taking a morning walk, who called the police. It was around 7:11 a.m. and Lee was already dead when the man found him, according to police.
Police concluded Lee hanged himself on the tree using a tie and a scarf, but that the tree branch snapped.
“There is no extraordinary external injury, other than his neck showing signs of being hanged,” police said. “No signs that would point to possible murder or homicide.” [Joong Ang Ilbo]
For anyone that owns Lotte Group stock, now may be the time to start dumping it:
Lotte Group has been dragged into the controversy over where Korea deploys the controversial U.S. anti-missile battery, after its golf course in Seongju County, North Gyeongsang Province, emerged as the most probable alternative site.
Korea’s fifth-largest family-controlled conglomerate fears its duty free stores, hotels and other businesses that cater to Chinese visitors will be adversely affected if the government decides to install a Terminal High Altitude Area Defense (THAAD) battery at the Lotte Skyhill Country Club (CC), north of downtown Seongju. Lotte officials are also worried that its businesses in China will suffer.
Lotte is unlikely to get fair value for the golf course because the government offers compensation based on the property’s appraisal value, which is much lower than the market price.
However, the conglomerate is not in a position to publicly oppose the possible THAAD deployment to one of its most profitable golf clubs because its Chairman, Shin Dong-bin, his family members and heads of Lotte units are under investigation on allegations of breach of trust, embezzlement and other irregularities. [Korea Times]
You can read more at the link, but it will be interesting to see the Chinese reaction if Lotte is forced to sell the golf resort.
If US fast food workers think they have it bad with the US minimum at $7.25 an hour look at what their counterparts in Korea get paid:
The government announced on Friday the newly raised hourly minimum wage for next year.
According to the Ministry of Employment and Labor, the government will raise the hourly minimum wage by 7.3 percent from 6,030 won ($5.43) this year to 6,470 won starting at the beginning of next year.
“We accepted formal objections starting from July 21 to Monday, and we didn’t receive any from the labor representatives,” said Kwon Chang-joon, a director at the ministry. “We did receive a petition from the Korean Federation of Micro Enterprise but decided that there is no need for further consideration after reviewing various laws and decision-making processes by the Minimum Wage Commission with labor and business sectors.” [Joong Ang Ilbo]
Korean workers’ annual salary rose to 32.81 million won ($28,880) on average last year, up 470,000 won, or 1.5 percent from 2014, the Federation of Korean Industries reported.
Median yearly income from wages was 25 million won, while the average yearly salary of the top-10 percent of workers reached 64.32 million won. The FKI has made its analysis of annual salary by income class by using the data of the Ministry of Employment and Labor.
According to the analysis, the annual salary of the top-20 percent of workers was 46.25 million won or more, the top-30 percent was 36.40 million won or more, the top-40 percent was 30 million won or more and the top-50 percent was 25 million won or more.
The average yearly income of regular workers at large businesses came to 65.44 million won, putting them in the top 9.5 percent of the income class. That of regular workers at small to midsize businesses was 33.63 million won, putting them in the top 34.1 percent.
The number of workers who received 100 million won or higher a year totaled 390,000, or 2.7 percent of the total number of workers, those who made 80 million to 100 million won came to 410,000 (2.8 percent), 60 to 80 million won, 960,000 (6.5 percent), 40 to 60 million won, 2.03 million (13.8 percent), 20 to 40 million won, 5.54 million (37.7 percent), and less than 20 million won, 5.35 million (36.5 percent). [Korea Times]
You can read the rest at the link, but seems like it would be tough to get by on $28,880 a year for someone living in Seoul unless they are living with relatives or in a dual income family.
This news just causes me to smirk a bit considering the anti-US beef nonsense I saw happen in 2008:
US beef imports increased significantly as South Koreans turned away from their expensive local beef hanwoo, industry data showed on July 14.
US beef imports increased by 25.7 percent from January to May this year from the same period last year, to reach 61,062 tons, according to a report by the National Agriculture Cooperative Federation, better known as NongHyup.
South Korea became the third largest beef importer in the world during the period, after Japan and Mexico. [Korea Herald]
The whole issue with the succession issues and now government raid of Lotte Group is playing out like a Korean television drama:
Investigators carry out confiscated documents after raiding the headquarters of the Seoul-based Lotte Group on June 10, 2016. (Yonhap)
Prosecutors raided the headquarters of South Korea’s retail giant Lotte Group, as well as its six affiliates, on Friday over allegations of embezzlement and malpractice.
The Seoul Central District Prosecutors’ Office said it sent some 200 investigators to 17 places, including the group’s headquarters in central Seoul, its major affiliates and the homes of some executives.
Hotel Lotte Co., TV channel Lotte Homeshopping and its key retail unit Lotte Shopping Co. were all raided.
Prosecutors said they confiscated computer hard drives, accounting books and other documents in their asset transactions.
Travel bans have been put out for some of the company’s senior officials, according to prosecutors. Some of the executives are accused of making secret funds by exaggerating unit prices in contracts with their subcontractors.
Prosecutors also suspect the group created slush funds while making transactions between its affiliates.
“We could no longer postpone the raid as there have been tips that evidence was being destroyed,” a senior prosecutor said.
The conglomerate, which has sprawling businesses in both South Korea and Japan, has been riddled with a series of scandals from last year, including a high-profile fight between brothers for managerial control and the recent prosecutors’ probe into the group’s duty-free business unit.
Hotel Lotte Co., which has been preparing to list its shares later this month, postponed the proposed initial public offering (IPO) to next month as its senior officials have come under investigation over alleged bribery.
Prosecutors raided the hotel unit and the house of Shin Young-ja, the head of Lotte Foundation and daughter of group founder Shin Kyuk-ho, over the allegations last week.
The 74-year-old Shin and other company officials are suspected of receiving kickbacks from Jung Woon-ho, chief of the scandal-ridden cosmetics brand Nature Republic, in return for favorable space in Lotte’s duty-free shops. Both Shin and Hotel Lotte flatly denied the allegations. [Yonhap]
You can read more at the link, but I wonder if we see Mr. Shin show up in court in a wheel chair?
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