The creditors of SK Global, the trading firm at the center of a scandal that threatens to tear apart South Korea's third-largest conglomerate, rejected a plan by a sister company to prop the trading company up, and moved instead to shut it down.
The SK Corp, the oil refiner and flagship company of the SK Group conglomerate, owns 38 percent of the troubled trading company and had offered to swap stock for a portion of its debts.
But the creditors, led by Hana Bank, one of the country's largest lenders, rejected the offer as inadequate and said they would ask a court in Seoul to place the trading company into receivership, removing it from the control of the SK Group and the company's own top managers.
The SK Corp expressed shock over the decision and asked the creditors to reconsider.
The oil refiner has problems of its own. Its chairman, Chey Tae-won, was arrested in February and remains in jail on fraud charges related to his efforts to increase his control over the entire group. Nine other executives of the group face similar charges but have been freed while awaiting trial.
Analysts said the court was likely to agree to the creditors' request that SK Global be declared bankrupt. The next step is less clear: the court may order liquidation or give creditors a chance to reorganize the company and try to keep it a going concern. The trading company's liabilities of more than US$8 billion, including US$1.25 billion owed to the refining company, are more than twice its assets.
It was the debt owed to the refiner that precipitated Wednesday's action. The creditors demanded that the refiner essentially write off the entire debt by accepting stock in the trading company as payment. But the refiner offered to convert only about three-fifths of the total, according to reports in South Korean media.
Bankruptcy for the trading company would not only weaken the refining company, but would also deal a severe blow to the entire SK Group because of its role in the group's operations. The refining company relies on the trading company to market all its products, and other companies in the group also depend on it to varying degrees.
The refining company also owns 18 percent of SK Telecom, South Korea's biggest mobile phone firm, but the phone company has little need of the trading company and has said it will not provide any financial aid to it.
Complicating the refining company's situation is the 14.99 percent stake in it that was acquired this year by a foreign investor, Sovereign Asset Management, through an affiliate, Crest Securities.
Sovereign has pressed the refining company publicly not to put any more money into the trading company, whose accounting irregularities and other problems have revived memories of the scandal that brought down the Daewoo Group nearly four years ago.
SK Global hit the headlines last winter when it was forced to acknowledge that it had concealed losses of US$1.2 billion in its 2001 financial reports. Other errors totaling in the hundreds of millions of dollars have come to light since then.
The South Korean finance minister, Kim Jin-pyo, said on Wednesday that the government would not interfere in the dispute between the SK Group and SK Global's creditors. But the case has implications for the country's entire economy. Negative revelations about SK Global prompted investors to withdraw more than US$20 billion from the country's investment trusts, akin to large mutual funds, over a short period in March, and the government found itself having to help the trusts by forcing the banking system to absorb several billion dollars worth of bonds they owned that were issued by the country's credit card companies.
The case has also raised the issue of the ways founding families have retained control of the country's big conglomerates, known as chaebol, which still form the bedrock of South Korean business even after several of them failed in the 1997-1998 economic crisis.
The uncle of the current chairman of the SK Group founded it, and the current chairman's father was chairman for years. Chey, the imprisoned chairman of the refining company, is the son-in-law of a former South Korean president, Roh Tae-woo, who is imprisoned on corruption and other charges.
South Korea's president, Roo Moo-hyun, has vowed to crack down on corruption and family control over the chaebol. Officials have held off investigating other chaebol because revelations about SK have been so unsettling to the economy.
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
RESTAURANT POISONING? Deputy Minister of Health and Welfare Victor Wang at a press conference last night said this was the first time bongkrekic acid was detected in Taiwan An autopsy discovered bongkrekic acid in a specimen collected from a person who died from food poisoning after dining at the Malaysian restaurant chain Polam Kopitiam, the Ministry of Health and Welfare said at a news conference last night. It was the first time bongkrekic acid was detected in Taiwan, Deputy Minister of Health and Welfare Victor Wang (王必勝) said. The testing conducted by forensic specialists at National Taiwan University was facilitated after a hospital voluntarily offered standard samples it had in stock that are required to test for bongkrekic acid, he said. Wang told the news conference that testing would continue despite
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)