Indebted hostesses commit suicideTwo room salon hostesses in Pohang, North Gyeongsang, killed themselves this month, and police on Sunday rounded up 30 alleged loan sharks and requested arrest warrants for seven, saying outrageous interest rates drove the women to suicide.
The remaining 22 were under investigation without being detained on the same charge of illegal money lending.
According to police, loan sharks lent the women, surnamed Lee and Kim, 1 million won ($840) to 5 million won each from January 2006 to recently. The annual interest rates for the loans ranged from 133 percent to 2,889 percent.
When Lee and Kim, employees at room salons, had trouble paying back their loans, the moneylenders lent them another 3 million won, then deducted 2.5 million won, saying it was to make up for past loans, said the police.
The law on interest rates limits individuals not officially registered as moneylenders to charge an interest rate of no more than 30 percent.
Eventually, the two women, who had guaranteed each other’s debt, owed 100 million won in principle and interest.
The loan sharks called and texted the women 40 to 50 times a day, usually past midnight, threatening to visit their place of employment if they did not repay the debt.
Lee and Kim hung themselves in their apartments within one day of each other on July 7 and 8. On July 10, Moon, a close friend of Lee’s from work, committed suicide after hearing the news of her friend’s death.
A policeman in charge of the investigation said, “It seems the two borrowed more in order to repay earlier loans and committed suicide when they could no longer withstand the high interest rates. We’re guessing that they used the loans for living expenses.”
A police investigation found that since January 2008, the accused loan sharks lent money to over 80 adult entertainment establishment employees and made over 1,400 loans worth 2.5 billion won.
“There are quite a few employees here who barely have any income due to the bad economic situation,” stated an insider in the room salon business. “As many borrow money to support themselves, many become victims of high interest debt.”
The police examined Lee and Kim’s bank transactions and phone records to track down 30 loan shark suspects. The police decided to expand the scope of the case to investigate how loan sharks are preying on adult establishment employees.
By Hong Gweon-sam [firstname.lastname@example.org]