It turns out that 67% of HMM’s surplus US$4 billion funds have been deposited in low-interest funds managed by its largest shareholder Korea Development Bank (KDB).
This was revealed during a National Assembly session on 15 October by South Korean lawmaker, Kang Min-guk, who accused the state-backed policy lender of diverting HMM’s surplus funds to financial products to boost the bank’s income.
Kang, who is from the main opposition People Power Party, said he had studied HMM’s financial statements before raising his question.
85% of the surplus funds managed by KDB are in time deposits, while around US$322 million and US$23.5 million are invested in a money market trust and money market deposit account, respectively.
KDB now holds nearly 25% of the company’s shares, having become HMM’s largest shareholder in a debt-for-equity swap that enabled the company to escape bankruptcy in 2016. However, KDB chairman Lee Dong-gull has said that the bank will eventually release its grip on the company once it gets back on its feet.
Kang said, “There’s a high possibility that this kind of inefficient money management is being carried out in companies subject to restructuring other than HMM.”
Lee, who was present at the National Assembly session, said, “Interest rates are very low, because these are short-term funds, but among them (low interest rate products), KDB’s products gives relatively high interest rates. We do not decide on these issues.”
This new round of controversy about KDB’s involvement in HMM occurred after the company’s management negotiated a salary agreement with unions representing office and seafaring employees, after they threatened to strike.
Martina Li
Asia Correspondent
