[Exclusive] There Is an Additional 38 Billion Won Loan Withdrawn from 'Cheonhwadongin'

[Image source=Yonhap News]

[Asia Economy Reporter Jang Hyowon] It has been confirmed that, excluding No. 1, there is an additional 38 billion KRW in loans withdrawn from ‘Cheonhwa Dongin Nos. 1 to 7,’ major shareholders of ‘Seongnam Eutteul,’ the developer of Daejang-dong, which participated alongside Hwacheon Daeyu Asset Management.

Previously, the prosecution summoned Kim Man-bae, the major shareholder of Hwacheon Daeyu, to investigate the whereabouts of 47.3 billion KRW in loans that went out from Hwacheon Daeyu’s subsidiary Cheonhwa Dongin No. 1, raising the possibility that the investigation into the flow of funds may expand to Cheonhwa Dongin Nos. 2 to 7.

According to the credit analysis report related to Cheonhwa Dongin obtained by Asia Economy on the 1st, among Cheonhwa Dongin Nos. 1 to 7, the corporations with confirmed loan details are Nos. 1, 3, 4, 5, and 6. Among these, excluding No. 1, the loans withdrawn from Nos. 3, 4, 5, and 6 amount to 38 billion KRW.

As of the end of last year, Cheonhwa Dongin No. 3 holds 6.5 billion KRW in short-term loans and 900 million KRW in long-term loans. Approximately 90% of the 8.3 billion KRW in dividends received from Seongnam Eutteul during 2019?2020 was withdrawn as loans.

Notably, all of Cheonhwa Dongin No. 3’s short-term loans were lent to shareholders, executives, or employees. Cheonhwa Dongin No. 3 is a corporation represented by the sister of Kim, the major shareholder of Hwacheon Daeyu. It is known that Kim’s sister purchased the residence of the father of former Prosecutor General Yoon Seok-yeol in July 2019.

Cheonhwa Dongin No. 4 withdrew 19.7 billion KRW solely in short-term loans last year. Moreover, 9.7 billion KRW of this amount was considered unrecoverable and set aside as a bad debt provision. It is unknown to whom this money was lent. Additionally, 10.1 billion KRW in advance payments and 7.2 billion KRW in stock and bond investments were also disbursed.

Cheonhwa Dongin No. 4 is a corporation represented by key figure Nam Wook, a lawyer who is mentioned as a key person in the Daejang-dong development project, and has changed its corporate name to ‘NSJ Holdings.’ Up to this year, it has received a total of 100.7 billion KRW in dividends from Seongnam Eutteul, but last year alone, it spent 23 billion KRW on selling and administrative expenses and disbursed a total of 37 billion KRW through loans, advance payments, and other means.

Cheonhwa Dongin No. 5 is a corporation known to be actually owned by accountant Jung Young-hak. Accountant Jung is known to have purchased surrounding land aiming for private development of Daejang-dong at the end of 2009 together with lawyer Nam. Cheonhwa Dongin No. 5 has collected a total of 64.4 billion KRW in dividends up to this year, of which 5 billion KRW was loaned to Hwacheon Daeyu.

Cheonhwa Dongin No. 6 is a corporation represented by lawyer Cho Hyun-sung of the Gangnam law firm, who is known to have been involved in Hwacheon Daeyu’s initial investment attraction. It changed its name after absorbing and merging with the audio company D&0 in 2019, and on the 28th of last month, it changed its name again to ‘Jo & Companies.’ Representative Cho once defended lawyer Nam together with former special prosecutor Park Young-soo.

Financial statements up to the end of 2019 are confirmed for Cheonhwa Dongin No. 6, which held 5.9 billion KRW in short-term loans at that time. Of this, 1.6 billion KRW was lent to shareholders, executives, or employees, and the remaining 4.3 billion KRW was other short-term loans with unknown recipients. Additionally, this company also disbursed 1.5 billion KRW in advance payments.

An accounting industry official said, "There is a possibility that money has been withdrawn from the corporation under the name of loans," adding, "In this case, where the flow of funds is important, it is necessary to verify how the loans were used."

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