Ex-Kumho Asiana chief arrested over allegedly unfair inter-affiliate deals

Park Sam-koo, former chairman of Kumho Asiana Group, was arrested Thursday on charges of masterminding unfair financial transactions among group affiliates that allegedly resulted in huge gains for him and his family.

The Seoul Central District Court approved the prosecution's request for a warrant to put Park under pre-trial detention after questioning him in the morning and examining all relevant documents presented by prosecutors for hours.

The 76-year-old Park resigned as chairman of Kumho Asiana Group and its affiliate Asiana Airlines in 2019 to take responsibility for controversial bookkeeping for the nation's No. 2 carrier.

Park was then charged with unfairly mobilizing Asiana Airlines and other group companies to support Kumho Buslines, a leading provider of bus and freight transportation services that was controlled by him and his family.

Park was asked by reporters whether he accepted his charges before attending his arrest warrant hearing at the Seoul court Wednesday morning, but he only said, "I'm sorry."

At that time, a group of dismissed workers from an Asiana Airlines subcontractor staged a rally in front of the Seoul court calling for his immediate arrest.

According to the antitrust watchdog Korea Fair Trade Commission (KFTC), Kumho Asiana Group signed an exclusive contract with Swiss airline caterer Gategroup in late 2016 to provide in-flight meals for Asiana. Then the Swiss company acquired 160 billion won ($143 million) worth of bonds with warrants issued by Kumho Buslines with a zero rate of interest, resulting in the Kumho company earning

16.2 billion won in profits, the KFTC said.

As Kumho Buslines' financial condition further deteriorated, nine group companies, including Kumho Industrial Co., lent a total of 130.6 billion won in 45 installments without security to the transportation provider at an interest rate of 1.5 to 4.5 percent, which was lower than the normal interest rate of 3.49 to 5.75 percent.

The KFTC concluded that Kumho Buslines earned about 16.9 billion won in gains from the interest rate gaps, while Park and his family pocketed at least 7.7 billion won in profits and 250 million won in dividends.

The KFTC has imposed a 32 billion won fine on the group and reported Park and two group executives to the prosecution for criminal investigations.

Prosecutors raided the group's headquarters in Seoul last November and arrested a former group executive and a former KFTC official for allegedly conspiring to delete documents unfavorable to the company.

Kumho Asiana has said that all the contracts and deals involving Swiss company Gategroup and group affiliates were conducted normally and did not result in any illegal profits for relevant shareholders. (Yonhap)