Moneual’s receivership a red flag

Home > Business > Industry

print dictionary print

Moneual’s receivership a red flag




Winning multiple innovation awards at the world’s largest electronics trade show, CES, and acclaimed by Microsoft founder Bill Gates as a company to keep an eye on, Moneual hit an annual revenue of 1 trillion won ($946 million) 10 years after it was established. It is the No. 1 player in the robot vacuum cleaner market in Korea.

But as prosecutors and financial institutions prepare to investigate the company after its abrupt court receivership filing, it turns out the company may be a sand castle built on accounting fraud.

According to industry sources, Moneual filed for court receivership Monday in Suwon District Court, saying it couldn’t pay its debts. However, financial authorities say it is a suspicious move for a company that reported revenue of 1.27 trillion won and an operating profit of 11 billion won last year.

The financial industry is already worried about the potential impact.

According to the Financial Supervisory Service and banks, Moneual borrowed about 610 billion won. The Industrial Bank of Korea and the Korea Development Bank are reportedly the top two lenders.

“It’s a mystery that a normal-looking company suddenly filed for court receivership,” said an official from a local bank who asked for anonymity.

Industry insiders suspect that Moneual fraudulently inflated its export figures. According to the company’s report, 80 percent of its sales are overseas.

Apart from the banks, the Korea Trade Insurance Corporation (Ksure), which guaranteed about 300 billion won of Moneual’s exports, is also in trouble. Banks complained that they had approved loans to Moneual based on its export bond receivable, as guaranteed by Ksure.

The Korea Customs Service said yesterday it found evidence that Moneual inflated the export value of its products and will soon ask prosecutors to investigate the issue.

“The company is suspected of issuing a bond through fake exports to make payments for other bonds’ maturity,” said a KCS official.

The Financial Supervisory Commission (FSC) said that since Moneual isn’t listed on the stock market, the financial audit review should be done by certified accountants, but it can conduct the review on its own. It will also investigate the bank loans.

In addition, the FSC said it will conduct an audit review of Zalman Tech, a Kosdaq-listed affiliate of Moneual. The computer parts supplier was acquired in 2011. The stock price of Zalman Tech on the Kosdaq fell 14.61 percent to 935 won yesterday, its third straight daily-limit drop since Moneual’s court receivership filing.

While the financial industry is busy trying to solve the problem, electronics and venture companies said they were shocked at how a promising company could collapse in this way.

Moneual, founded in 2004, was run by Chairman Harold Park (Park Hong-seok), who is a U.S. citizen, and his younger brother, Vice President Park Min-seok, a Canadian citizen, as well as Vice President Won Duck-yeon, a former industrial designer.

The company seemed to have ambitious plans. In 2012, Moneual said that it had spent 50 billion won to build a new headquarters in Jeju, while last month the company announced that it would release a 50-inch TV to test the market.

However, an employee from Moneual said the company was falling apart.

“The founder and vice president Won often had friction with CEO Park regarding their areas of responsibility,” said a Moneual employee who asked not to be named. “After Won quit the company in July, the atmosphere wasn’t good.”

Meanwhile, industry sources say that Park appeared at the company’s Jeju headquarters on Wednesday and apologized to employees.

BY JOO KYUNG-DON, PARK YU-MI [kjoo@joongang.co.kr]

More in Industry

Micro weddings, an unexpected upside of the pandemic

LG Electronics reports 87.8% net profit increase in Q3

Autonomous bus will allow the postman to take a holiday

Nexon donates 10 billion won to palliative care center for children

HHI Holdings sees earnings halved in Q3, but signs of improvement

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now