A venture company’s fraud

“Cling Cling,” a robotic vacuum cleaner produced by Moneual, was popular among dual-income couples or newlyweds. The company received several top innovation prizes at the International Consumer Electronics Show for its home theaters and PCs. Even Microsoft co-founder Bill Gates praised the company, saying, “Pay attention to this company.” The promising company, however, suddenly filed for a corporate rehabilitation process, sending shockwaves through the financial industry.

Since its foundation in 2004, Moneual had grown in size through aggressive marketing efforts after Park Hong-seok, former sales director of Samsung Electronics` North America market, took the helm of the company. Last year, it joined one trillion won (950 million U.S. dollars) revenue club. But it suddenly filed for a corporate rehabilitation process, claiming that it cannot pay back bank loans. It turned out that the company forged export documents to take out loans illegally. Moreover, the loan balance of 676.8 billion (643 million dollars) from 10 banks is highly unlikely to be paid back. Some say it is the worst “fraud loan case” following the KT ENS case occurred early this year.

Moneual is an unlisted company with a 94.7-percent stake held by Park, who disappeared right after the filing of the company`s corporate rehabilitation process. Some argue that he dined and dashed after taking dividends of 6.6 billion won (6.27 million dollars) last year at a time when the company is nothing but an empty shell. He lives in Mark Hills in southern Seoul, the most expensive apartment in Korea costing over 100 million won (95,010 dollars) per 3.3 square meters. He bought it with company money and lived there, which is a typical example of moral hazard. A globally promising venture entrepreneur has turned out to be a master of illegality and frauds.

State-run companies and banks are deplorable. Korea Trade Insurance Corporation, which provided a company guarantee, and banks that extended loans to it, trusted Moneual’s documents and did not check them at all. Among those negligent financial institutions, Woori Bank found Maneual`s cash flows weird and collected all of its loans last year. State-run companies, such as the Industrial Bank of Korea, Korea Development Bank and the Export-Import Bank of Korea, suffered huge losses. The banks supported by taxpayers’ money were pushovers. A thorough investigation should be done to find out whether there is anyone associated with forging the documents and what the problems are in the scheme of supporting export financing.