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Ex-Hanjin Shipping chairwoman quizzed over controversial stock sale

All News 15:55 April 29, 2016

SEOUL, April 29 (Yonhap) -- Choi Eun-yeong, former chairwoman of Hanjin Shipping Co., has been questioned by investigators from the Financial Services Commission (FSC) on suspicion that she and her daughters sold their remaining stocks in the ailing shipping company using undisclosed corporate information days before its application for creditor-led debt restructuring, sources said Friday.

The FSC sent its investigators to Choi's office in Yeouido, Seoul, on Thursday to question her about the background behind her family's sudden decision to dispose of Hanjing Shipping stocks, the sources said.

The investigators then secured Choi's mobile phones, computers and relevant documents for further investigation into the controversial stock sale, while simultaneously questioning some Hanjin Shipping officials suspected of leaking company information to the former chairwoman.

According to a recent regulatory filing, Choi and her two daughters sold their entire 0.39 percent stake, or 669,248 shares, in South Korea's biggest container carrier between April 6-20.

The controversial stock sale was completed two days before Hanjin Shipping, long troubled by an industry slump and ballooning losses, decided to apply for a creditor-led debt revamp and a self-rescue program.

Choi's family is estimated to have avoided some 1 billion won (US$877,000) in losses by selling their shares ahead of the company's decision to file for debt restructuring.

The FSC earlier said it opened an investigation into whether the Choi family sold the shares using undisclosed corporate information to avoid hefty losses. Market watchers slam the stock sale as a typical case of entrepreneurial moral hazard, regardless of whether it violated a related law or not.

Under the law, executives, staff members and major shareholders of a company are deemed "insiders" who are banned from using undisclosed information. The status is retained for one year even after they retire or the company splits off.

Violators could face a prison sentence of up to 10 years or a fine that amounts to three times the amount of gains or losses avoided.

Currently, Choi is now the chairwoman of Eusu Holdings Co. that separated from Hanjin Group in May last year. Eusu Holdings, formerly known as Hanjin Shipping Holdings, has shipping-related units under its wing. Hanjin Shipping is no longer an affiliate of Eusu Holdings.

In April 2014, South Korea's leading air carrier Korean Air Lines Co. led by Chairman Cho Yang-ho acquired a 33.23 percent stake in Hanjin Shipping to become the largest shareholder.

Cho's younger brother Soo-ho ran the shipping company until he died in November 2006 and then his wife, Choi, ran the cash-strapped company after the 2008 financial crisis before quitting in April 2014.
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