Executives indicted for allegedly plotting South Korean shipyard's bankruptcy

South Korean media have reported that some executives of the Korea Development Bank (KDB) and the Korea Trade Insurance Corporation (KTIC) have been accused of deliberately plotting the 2015 bankruptcy of local company SLS Shipbuilding.

Former SLS Group Chairman Lee Kook-chul recently filed a lawsuit with the Seoul Central District Prosecutors' Office in which 49 people have been indicted. This number includes Min Ryu-sung, former President of KDB, and Yoo Chang-woo, former President of KTIC.

According to documents submitted by Lee Kook-chul, in 2009, SLS Shipbuilding obtained a total of 77 ship orders from domestic and foreign customers. However, the defendants Min and Yoo permitted the construction of only 30 of the 77 ship orders on the grounds of corporate restructuring, and the remaining 47 vessels were to be withdrawn from the shipbuilding contracts. This then resulted in SLS incurring total losses equivalent to US$1.2 billion, which also includes the interest accrued on the 47 cancelled vessels.

Lee added that, during the process of deliberately causing the bankruptcy of SLS Shipbuilding, Min and Yoo caused him to lose his majority shareholder status and representation in 2010 through a board made up of unauthorised directors. Subsequently, it took 10 years for Lee to restore his corporate status and representation rights in 2022 through relevant lawsuits.

Lee also claimed that the bankruptcy had been caused by political interference, which began when a supposed whistleblower submitted details criticising the company's management rights. These details then prompted the South Korean government to order an investigation.

Lee had earlier filed a lawsuit naming 13 respondents including Min and Yoo, but later withdrew it. This re-filed suit named an additional 36 respondents.

Prior to declaring bankruptcy in 2015, SLS Shipbuilding had been involved in the construction of large commercial vessels such as chemical tankers.