Downfall of two ex-airline owners

15-May-2021 Intellasia | Koreaherald | 7:13 AM Print This Post

The latest arrests of former Asiana Group Chair Park Sam-koo and Eastar Jet founder Lee Sang-jik illustrate the rise and fall of two airline business moguls.

The two came from different backgrounds, with Park being the second generation of a chaebol family and Lee being a self-made entrepreneur.

For both, it was an airline that allowed them to accumulate wealth and fame, before they ended up getting arrested ― Park on May 13 and Lee on April 28 ― on embezzlement and other charges.

The Park family-controlled conglomerate began as a taxi business in southwestern Korea in the 1940s and it grew and prospered by advancing to multiple sectors, including the bus transport, tire, airline and petrochemical fields.

It once ranked as the country’s seventh-largest business group after Park Sam-koo took over the chairmanship in 2002.

Established in 1988, Asiana Airlines was particularly noted for contributing to the conglomerate’s revenue and brand image. In fact, the conglomerate renamed itself from Kumho Group to Kumho Asiana Group in 2003.

However, excessive business expansion, such as the acquisitions of Daewoo E&C and Korea Express, triggered a liquidity crisis, which forced the conglomerate to enter a debt workout programme and sell off key affiliates.

Under these circumstances, Park, 76, resigned as the group chair in 2019, taking responsibility for unfair financial transactions among the group’s affiliates, including the country’s No. 2 carrier, Asiana Airlines.

Park has been accused of taking more than 130 billion won ($115.1 million) in low-interest loans without collateral, from nine group companies in order to support Kumho Buslines. This decision allegedly resulted in huge gains for him and his family.

Asiana Airlines now awaits a merger with rival Korean Air possibly by the end of 2022.

Lee, 58, was a salaryman before starting his own business in the 2000s.

In 2007, he established the low-cost carrier (LCC), Eastar Jet, which once served as many as 20 million passengers while flying to multiple cities. These cities included Busan and Jeju as well as destinations in Japan, China and Thailand.

Lee later entered politics and served his first National Assembly term from 2012 to 2016.

He was re-elected for a second term in April 2020 as an assemblyperson from the ruling Democratic Party of Korea (DPK). But he left the party in September of the same year and became an independent, amid controversy over unpaid wages and mass layoffs, as well as allegations surrounding his family, while leading Eastar Jet.

He asked fellow lawmakers not to approve a motion that strips him of immunity from arrest after being indicted for colluding with a senior Eastar Jet official and inflicting about 43 billion won in financial damage to the airline. The financial damage was caused by paying off long-term loans early and underselling company shares to a specific subsidiary.

The National Assembly, however, approved the motion stripping him of immunity from arrest. Lee is the second sitting lawmaker to be put behind bars in the current legislature, after Rep. Jeong Jeong-soon of the DPK.

Eastar Jet has filed for court receivership and is searching for a buyer after laying off 600 employees amid the COVID-19 pandemic.


Category: Korea

Print This Post

Comments are closed.