Removal of cash raises eyebrows

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Removal of cash raises eyebrows


Customers who bought corporate bonds and commercial paper from Tongyang financial affiliates get consulted by Financial Supervisory Service (FSS) employees at the financial regulator’s headquarters in Yeouido, western Seoul, yesterday. [NEWSIS]

Amid growing criticism of Tongyang Group for selling high-risk bonds to individual investors until just before the financial collapse of five affiliates that filed for court receivership earlier this week, the conglomerate’s vice chairwoman allegedly removed personal cash from a safe box, according to a media report yesterday.

The report is stirring controversy among investors who question whether family members of Tongyang Group are taking enough responsibility for the current debt crisis that has left tens of thousands of individual investors at risk of losing more than 2 trillion won ($1.8 billion).

Yesterday, local media reported that Lee Hae-kyung visited the headquarters of Tongyang Securities, the conglomerate’s brokerage arm, in central Seoul on Tuesday and took cash from a personal safe box.

The media quoted an official from the securities company as saying, “Although it is difficult to say how much money was taken out, I’ve confirmed that [she] came with four to five big bags and filled them with cash.”

Although the money wasn’t taken out from a deposit account linked to the cash-strapped Tongyang Group, some consider the move morally reprehensible. Lee is the wife of Tongyang Group Chairman Hyun Jae-hyun and daughter of the group’s founder, Lee Yang-koo.

On Tuesday, when Lee reportedly visited Tongyang Securities headquarters, two core affiliates of the group - Tongyang Networks and Tongyang Cement - filed for court receivership. The previous day, three affiliates - Tongyang Corporation, Tongyang International and Tongyang Leisure - did the same after failing to repay matured debt.

The report quoted another Tongyang Securities official as saying many employees at the brokerage firm have expressed disappointment at the direction of the chairman over the vice chairwoman’s removal of a large amount of money at a time when employees are in panic for having sold commercial paper and bonds of a company about to go bankrupt.

According to industry sources, Kim Bong-soo, a senior official at Tongyang Group in charge of strategic affairs, was dismissed from his post earlier this week. Kim is the son-in-law of Chairman Hyun. Sources also said Tongyang Networks’ chief executive Hyun Seung-dam, the eldest son of Chairman Hyun, will also leave the company. A group official said, “they are leaving to take responsibility; the move isn’t to evade responsibility.”

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