FSS warns public about dubious sunken gold

The nation’s financial watchdog warned investors on Thursday to be wary of stocks related to Shinil Group, a local company that claimed to have found a Russian warship that sank 113 years ago, rumored to be stuffed with gold and other treasures.

The little-known group that claims to be in the shipping, bio and construction businesses announced earlier this week that its team discovered the wreck of the Dmitri Donskoi off the coast of Ulleung Island, adding that the ship could hold gold worth around 150 trillion won ($131.8 billion).

The company is claiming that the Russian ship was sunk by Japanese forces near Ulleung Island during the Russo-Japanese War in 1905.

The price of Jeil Steel shares soared a whopping 30 percent on Tuesday because Ryu Sang-mi, head of the Shinil Group, is the second largest shareholder of the steel company. Shinil Group is not listed.

Authorities cautioned the public because there is no absolute proof that it found the Dmitri Donskoi or that it is loaded with valuable cargo. The company’s ability to salvage the sunken ship is also doubted.

“Investors need to be careful and should not make investments based on rumors without confirming facts regarding the salvage of the warship,” said the Financial Supervisory Service (FSS) in a statement.

“There was a case where investors suffered losses because of a company that claimed to find a treasure ship, but the company went bankrupt due to financial difficulties,” the watchdog said.

The FSS was referring to Dong Ah Construction Industrial, a company whose construction business went bankrupt in 2001. But in 2003, a remnant of the company found the Dmitri Donskoi. In 2007, it was acquired by another company.

Dong Ah said on Thursday that it should get credit for first discovering the ship.

“We held a press conference to reveal the finding in 2003,” said the company in a statement.

“Shinil just recorded the ship with more advanced equipment to provide enhanced footage after they went to the location we found,” the company said.

The former construction company went on to note that the value of gold allegedly inside the ship is estimated to be 22 billion won, not 150 trillion won. To retrieve a ship in deep waters, a company needs approval from the Ministry of Oceans and Fisheries and pay a deposit equivalent to 10 percent of the assumed value of the wreck and what it may hold.

The ministry said that Shinil Group hasn’t applied for approval.

“We have not yet received any application or request from Shinil Group,” said a source at the Fisheries Ministry.

Putting aside the question of whether Shinil is able to pay a 10 percent deposit on 150 trillion won worth of gold, the company looks shady.

On its website, the company claims an address in International Plaza in Singapore, but when the Korea JoongAng Daily called this address, a Korean business consulting company answered.

The firm said it is not related to Shinil Group.

Most of Shinil Group’s affiliates - including Shinil Biologics and Shinil Goldcoin - are not registered as corporations. Shinil’s website was blocked on Friday, and the company did not answer the phone.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]