KNOC Uses Taxpayer Money to Write Off Foreign Insolvent Company's Debts(?)

9 Trillion Won Invested Since 2009 Acquisition, Recovery Rate Only 0.57%
Kwon Hyangyeop: "3 Trillion Won Spent to Repay Harvest’s Debts in Canada"

Korea National Oil Corporation (hereinafter referred to as KNOC) has continued to waste taxpayer money by pouring approximately 3.15 trillion won into the Canadian Harvest project, which is widely regarded as a representative failure of South Korea's overseas resource diplomacy, over the past three years.

According to materials submitted by Kwon Hyangyeop, a member of the Democratic Party of Korea representing Suncheon, Gwangyang, Gokseong, and Gurye in South Jeolla Province, KNOC made an additional capital injection of 2.215 billion US dollars (approximately 3.15 trillion won as of the exchange rate on the 19th) between 2022 and 2024 for the purpose of repaying Harvest’s debts.

Kwon Hyangyeop, member of the Democratic Party of Korea.

KNOC acquired Harvest in 2009 and has since invested approximately 9 trillion won, but has recovered only about 50.5 billion won, resulting in a cumulative recovery rate of just 0.57%. The amount injected over the past three years accounts for 30% of the total investment. However, this was not a simple investment; it was used to pay off the existing debts that Harvest had accumulated. The entire 2.215 billion US dollars was used exclusively for debt repayment.

Since 2021, KNOC has been pursuing an “exit strategy” to sell Harvest. In the process, at the end of 2021, Canadian regulatory authorities notified the company that the sale would not be approved unless the debts were cleared. To meet the mandatory condition for transaction approval (financial soundness), KNOC proceeded with the capital injection. In effect, taxpayer money was used to “write off” the debts of the insolvent company Harvest.

Since 2021, Harvest has begun selling off its assets in 38 groups. To date, a total of 16 groups have been sold, but the total sale price amounted to only 3.2 billion won. Even then, after accounting for profits and losses, the net result was a deficit of 2.5 billion won. KNOC stated that the expected sale price for the remaining 22 groups is currently under negotiation and remains “undisclosed.”

An even bigger concern is that Kwak Wonjun, Vice President of KNOC, who was deeply involved in the acquisition and operation of Harvest, is now the chief manager of the controversial “Great Whale Project.” Kwak reportedly worked at the Canadian office from 2006, three years prior to the Harvest acquisition, and was involved in the acquisition process. Since 2010, he has served as Deputy COO of Harvest. He is still involved in operations as the chairman of the Harvest board of directors, and attended a board meeting in Canada at the end of last year.

Kwon Hyangyeop stated, “Pouring 3 trillion won into repaying the debts of the insolvent Canadian company Harvest is an insult to the public. It is no different from using taxpayer money to write off the debts of a foreign insolvent company.”

She went on to criticize, “It is a moral hazard for the organization that the person responsible for leading the 9 trillion won resource diplomacy failure is now in charge of another astronomical-scale gas field project in the East Sea. If the person responsible for the disastrous failure of Harvest continues to serve as the public face of KNOC, how can anyone trust this country’s resource policy?”

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