Korea's financial regulator on Monday said it will open an investigation into the controversial sale of stocks in Hanjin Shipping by the family of its former chairwoman.
The Financial Supervisory Service (FSS) said it will look to see if Eusu Holdings Chairwoman Choi Eun-yeong, former chairwoman of Hanjin Shipping, sold the financially troubled shipping company's stocks using undisclosed information to avoid hefty losses.
Choi Eun-yeong, former chairwoman of Hanjin Shipping (Yonhap)
Hanjin Shipping, the country's biggest container carrier by sales, was to apply for self-rescue measures later Monday, which require an approval from its creditor banks to get its business back on track.
Hanjin Shipping and other local shippers have been struggling with falling freight rates amid a protracted slump in the world's economy. Hanjin Shipping has to pay off or refinance 500 billion won worth of debt that matures in the first half of the year. At the end of last year, Hanjin Shipping's total debt reached 5.6 trillion won.
According to a regulatory filing on April 22, Choi and her two daughters sold their entire 0.39 percent stake, or 669,248 shares, in the shipping company between April 6-20.
If company executives and major shareholders gain profits or avoid losses using undisclosed information that could affect the company's share prices, they could face punishments or fines by the financial authorities.
"As Choi and her family are suspected of having sold their Hanjin stocks by using any undisclosed information to avoid losses, it is natural for the authorities to look into whether their selling is against the law or not," an FSS official said.
The planned probe is aimed at seeing if there was any illegality in the trading, the official said, adding the probe has nothing to do with the contribution of private assets by the company's large shareholders during its process of restructuring.
Eusu Holdings, formerly known as Hanjin Shipping Holdings, has shipping-related affiliates under its wing. Hanjin Shipping is no longer an affiliate of Eusu Holdings.
In April 2014, Korean Air Lines led by Chairman Cho Yang-ho acquired a 33.23 percent stake in Hanjin Shipping for about 400 billion won to become the biggest shareholder.
Cho's younger brother Soo-ho ran the shipping company until he died in November 2006 and then his wife, Choi Eun-yeong, managed the cash-strapped company amid a prolonged slump in the shipping industry after the 2008 financial crisis.
Shares in Hanjin Shipping have fallen 28 percent so far this year. It shifted to a net profit of 3 billion won in 2015 after inking a net loss of 423.33 billion won a year earlier. (Yonhap)
