The former chairman of Kumho Asiana Group, a large South Korean chaebol (conglomerate) whose subsidiary Kumho Industrial is the biggest shareholder in Asiana Airlines (OZ, Seoul Incheon), with a 30.77% stake, has been arrested on charges of embezzlement.
Park Sam-koo, 76, was arrested on May 13 for allegedly overseeing unfair transactions between Kumho Asiana Group affiliates that yielded huge gains for him and his family, local media reported.
After questioning him and examining the relevant documents, Seoul Central District Court approved a request by prosecutors for a warrant to place Park under pretrial detention.
Specifically, the businessman is accused of taking KRW130.6 billion won (USD116 million) in low-interest loans, without collateral, from nine companies within the group, including Asiana Airlines, to support family-controlled firm Kumho Buslines.
Park had already resigned as chairman of both Kumho Asiana Group and Asiana Airlines in 2019 to answer for an accounting debacle at the carrier in 2019 when its auditor refused to sign off on the airline’s 2018 financials citing incomplete information. The company was subsequently forced to issue a restatement. Park was later charged with rerouting finances to support Kumho Buslines.
The issues began in 2016, according to the Korea Fair Trade Commission, when the chaebol signed an exclusive contract with Swiss caterer Gategroup to provide inflight meals to Asiana Airlines. Gategroup also acquired KRW160 billion (USD142 million) worth of bonds with warrants issued by Kumho Buslines, paying no interest.
As Kumho Buslines’ financial condition deteriorated, nine companies in the group lent money to the firm in instalments at interest rates ranging from 1.5% to 4.5%. The bus firm reportedly saved about KRW16.9 billion (USD15 million) in interest due to the loans, as the rates were below market rates. Park and his family are alleged to have earned around KRW7.7 billion (USD6.8 million) in profits and KRW250 million (USD222,000) in dividends.
Kumho Asiana Group has denied that the loans were related to Gategroup winning the exclusive contract. But, on May 13, asked whether he accepted the charges, Park said, “I’m sorry.”
