Eastar Pilots Union Files Complaint Against Sang-jik Lee with Prosecution... "Suspected Tax Evasion and Other Charges"

On the 23rd, when Jeju Air announced the termination of the stock purchase agreement for acquiring management rights of Eastar Jet, effectively giving up the acquisition, a sense of silence prevailed at Eastar Jet's headquarters in Gangseo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Yu Je-hoon] The Eastar Jet labor union announced on the 29th that it will file a criminal complaint against Lee Sang-jik, a member of the Democratic Party and the de facto major shareholder, with the prosecution. This move comes as the merger and acquisition (M&A) with Jeju Air has fallen apart, marking the start of a serious investigation into mismanagement responsibilities.

Meanwhile, Eastar Jet is striving to secure a lifeline for survival by continuing talks with a third-party investor to prepare a Plan B. However, due to the impact of the novel coronavirus disease (COVID-19) and various controversies, the outlook is overwhelmingly described as 'zero visibility.'

The Eastar Jet Pilots Union will file a complaint this afternoon at the Seoul Southern District Prosecutors' Office against Lee on charges of tax evasion under the Tax Offenses Punishment Act and false statement publication under the Public Official Election Act. Currently, Eastar Holdings, which holds 39.6% of Eastar Jet and is the largest shareholder, is 100% owned by Lee’s two children.

The Pilots Union had been weighing the timing of the complaint considering the stalled M&A process, but after last week’s final cancellation of the stock purchase agreement (SPA) with Jeju Air, they decided to report suspicions of irregular succession involving Lee’s children and various paper company allegations to the prosecution.

As conflicts intensify, Eastar Jet is making every effort to 'take off again,' including resuming domestic flights. The government has stated that Eastar Jet must present its own Plan B (self-rescue plan) to receive support. Lee himself said the day before that "I understand that CEO Choi Jong-goo may soon create an opportunity to reveal the vision (Plan B), possibly as early as next week."

In response, Eastar Jet is currently seeking a third investor to replace Jeju Air. At an employee meeting held the previous day, Eastar Jet explained that it is in contact with about four companies and funds and mentioned the possibility of a three-month unpaid leave transition and court receivership to facilitate smooth procedures.

Additionally, Eastar Jet has requested support from Jeollabuk-do, a region with local ties. Eastar Jet has emphasized its local roots in Jeonbuk, including its first flight from Gunsan Airport, and Lee is also running for re-election in Jeonju, Jeonbuk.

However, many in the industry remain skeptical about the feasibility of these efforts. An industry insider said, "Resuming flights alone requires at least 30 billion KRW, but with unpaid debts exceeding 170 billion KRW and various controversies, it is doubtful anyone will readily step in," adding, "Local governments also seem reluctant to get involved."

The situation inside the company is similar. In fact, the unpaid leave proposal suggested by management the day before was scrapped after employee backlash. If a third investor is not found and the company proceeds with rehabilitation or bankruptcy procedures, employees may not even be able to recover severance pay. Under current law, severance pay is calculated based on the last three months’ wages before resignation.

Park Yi-sam, chairman of the Pilots Union, stated, "Judging from Lee’s previous actions, it seems he is ultimately considering Eastar Jet’s bankruptcy and evading responsibility," emphasizing, "To increase the possibility of government support and subsequent court receivership and rehabilitation, the issue with Lee must be resolved first." Reporter Yu Je-hoon kalamal@

This content was produced with the assistance of AI translation services.