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Rule #1: YOU MUST clip all extraneous text when replying to a message.
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(I'm surprised this guy never ended up on the board of trustees of NYU,
the New School, or Bard College.)
NY Times, July 27 2014
In Ferry Deaths, a South Korean Tycoon’s Downfall
By CHOE SANG-HUN, MARTIN FACKLER, ALISON LEIGH COWAN and SCOTT SAYARE
SEOUL, South Korea — After all the lavish galas in his honor at
landmarks like the Louvre and Versailles, the tens of thousands of
devotees following his religious teachings for decades, the hundreds of
homes and businesses reportedly stashed around the globe, Yoo Byung-eun
ended up alone, his body splayed on its back and rotting in the weeds,
empty liquor bottles by his side.
Weeks before, nearly 10,000 police officers had raided his church’s
compound in the largest manhunt in South Korean history, armed with
backhoes to dig up underground hiding places, only to leave
empty-handed. They had almost caught him once, it turned out, but Mr.
Yoo slipped away, hiding in a secret room behind a wall in a distant
villa, almost $1 million in two suitcases at the ready.
After a lifetime of craving recognition, of building a flock that
showered him with cash and helped fund a business empire selling
everything from toys to ships, Mr. Yoo found his moneymaking machine
brought more than his own undoing, prosecutors say. It also contributed
to one of the worst peacetime disasters in the nation’s history — the
sinking of the ferry Sewol in April, which killed 304 passengers, the
vast majority of them high school students.
Millions of dollars from the web of companies, including the one that
owns the ferry, went to Mr. Yoo, 73, and his two sons, prosecutors say,
squeezed from the business through an increasingly perilous set of
decisions that enriched his family at the expense of the passengers.
Scores of cabins and even an art gallery laden with marble were added to
the ferry’s upper decks, making the ship top-heavy. So much extra cargo
was crammed on board that there was sometimes no space to secure it
properly with chains and lashings. And, prosecutors say, the ferry’s
crucial ballast water, needed to balance all the additional weight, was
deliberately drained so that the vessel would not sit too low — a
telltale sign to inspectors that the ferry was dangerously overloaded to
bring in more money.
“It was a miracle that the ship actually sailed as far as it did; it
could have tipped over any time,” said Kim Woo-sook, dean of the
graduate school at Mokpo National Maritime University. “For them, cargo
was cash.”
Few events in recent memory have rattled South Korea more deeply than
the sinking of the ferry, a disaster captured in haunting text messages
and cellphone videos from students as the ship slipped into the Yellow Sea.
As the ferry first started tilting, some students did not yet grasp the
danger, shouting, “This is fun!” and joking about posting the event on
Facebook. But as the ship listed farther, panic spread, with students
yelling, “We don’t want to die!” and recording hurried goodbyes to their
parents.
“This looks like the end,” one boy shouted into a smartphone, before
another cut in: “Mom, Dad, I love you.”
Reinventing a Swindler
Such scenes reverberated around the world. Since then, scores of people
have been arrested in connection with the sinking, including regulators,
the captain, officers and members of the crew. But at the heart of the
tragedy, and the investigation into how it happened, sits one of the
nation’s most eccentric, and now reviled, families.
“The Yoo Byung-eun family, which is the root cause of this calamity, is
inviting the ire of the people by flouting the law rather than repenting
before the people and helping reveal the truth,” said President Park
Geun-hye, who has also been widely criticized for her government’s
failure to prevent the disaster, much less find Mr. Yoo before his
death. His wife and two of his four children are now in custody, and one
son remains at large.
The Yoo family’s representatives did not provide answers to questions
about the disaster, their businesses or their church. Many church
members have said, however, that Ms. Park is trying to demonize the Yoos
to deflect criticism from her government. But dozens of interviews with
regulators, Coast Guard officials, prosecutors, dockworkers, crew
members and family business associates seem to confirm the prosecutors’
contention that the Yoo family played a crucial role in the tragedy by
cutting corners on the ferry’s safety, even as it was spending lavishly
on itself.
The family used a sprawling group of at least 70 companies on three
continents as a personal A.T.M., prosecutors say. In their own names or
through companies that they control, family members own at least $8
million worth of real estate in the United States alone, including a
condominium at the Ritz Carlton in Manhattan, and have the rights to be
an American distributor of Debauve & Gallais, the French maker of luxury
chocolates once favored by Marie Antoinette. In France, they own an
entire hilltop village.
The family also spent tens of millions of dollars to lionize Mr. Yoo, a
convicted swindler known best in South Korea in connection with the mass
suicide of 32 members of a splinter group of his church more than two
decades ago.
Hoping to reinvent him as a Zen-like artistic genius, a family business
donated $1.5 million to the Louvre, which then etched his new identity —
the pseudonym Ahae — in gold on a marble wall at the museum. The family
inaugurated a worldwide tour of his photos at Grand Central Terminal in
New York and spent nearly $1 million to rent space as part of a deal to
exhibit his work for months at Versailles, the palatial former home of
French monarchs.
A sumptuous affair to begin the event, catered by a Michelin-starred
chef, drew ambassadors and celebrities like the mother of Carla
Bruni-Sarkozy, the singer-model wife of the former French president,
according to Le Figaro. At a separate concert at the end of the
exhibition, the London Symphony Orchestra played, premiering a brand new
piece: Symphony No. 6 “Ahae.”
In one of their more damning findings, prosecutors say that so much
money was being siphoned away from the ferry company to Mr. Yoo and his
relatives that it was starved of funds and spent just $2 last year on
safety training for the Sewol’s crew members. The money went to buy a
paper copy of a certificate.
During the accident, the chaos caused by the lack of training was clear.
Some crew members readily admitted in interviews after the disaster that
they had no idea what to do during the emergency, had never done
evacuation drills and made fatal mistakes like repeatedly telling
passengers over the intercom to “stay inside and wait” as the ship began
to sink, dragging scores of students down with it.
The ferry company was able to cut corners so dangerously because South
Korea’s system for regulating ferries — like so much of regulation in
South Korea — is based on trust, riddled with loopholes, manpower
shortages, petty corruption and a reliance on businesses to police
themselves. The broad, tacit acceptance of lax safety standards to keep
the economy humming has been blamed for everything from building
collapses to a nuclear energy scandal over fudged testing results that
has raised serious questions about the safety of the country’s 23 reactors.
Public outrage since the ferry accident has pushed President Park to vow
to strengthen safety standards by rooting out what she called “layers of
corruption,” including collusive ties between regulators and businesses.
Prosecutors and government auditors said Coast Guard officials turned a
blind eye to problems with safety checks after they had been taken to
the resort island of Jeju, where they were wined and dined by the ferry
company. Other inspectors admitted that they eyeballed boats from a
distance to see how deeply they sat in the water, effectively guessing
whether they were overloaded with cargo.
Members of Mr. Yoo’s church, known as Salvationists, say such
discoveries are behind the government’s push to investigate the Yoos,
saying it hopes to shift attention away not only from its own regulatory
failures, but also the badly fumbled rescue attempt of the ferry, which
had only 172 known survivors. The accident left Ms. Park’s government in
disarray. Her prime minister tendered his resignation, and her approval
ratings have plummeted.
“It’s as if all the problems are solved once they crack down on Yoo
Byung-eun and the Salvationists,” said Yi Tae-jong, who operates an
online archive of Mr. Yoo’s sermons and is a church spokesman. “From the
days of founding our church, he is our biggest mentor.”
Grand Childhood Ambitions
Mr. Yoo’s grand ambitions started in boyhood. A sickly child, he dreamed
of becoming “a sculptor greater than Michelangelo,” according to a
collection of sermons published in 1981. But soon after high school, in
the 1960s, he found a new calling: religion.
The source of his inspiration was an American Christian missionary,
whose teachings led the young Mr. Yoo to evangelize as well, his church
website says. A charismatic speaker, he soon had enough followers to
help found a new religious movement with a fellow preacher — following a
well-worn tradition in South Korea, the birthplace of the Rev. Sun Myung
Moon and his Unification Church.
“They no longer have to repent, even if they commit such sins as
adultery and thievery; they are lawless people,” said Jin Yong-sik, a
Presbyterian pastor in Anseong and an expert on fringe churches in South
Korea. “Yoo Byung-eun is a cult leader. He is deified as a Moses or a
messiah among his followers, and they give him money as he pleases.”
Church leaders dispute the allegations, saying their religion is being
vilified despite being rooted in the Bible. One of their tenets — a
focus on health — appears to stem from Mr. Yoo’s frailty as a child,
when he suffered from tuberculosis, and a personal preoccupation with
cleanliness. He preached that cleansing the body and particularly the
blood could help achieve spiritual purity, and wrote disapprovingly of
fellow Christians’ lengthy prayers before meals that allowed “little
white specks” of spit to fall in their food.
As Mr. Yoo built his church, he embarked on a second career, as a
business magnate. Starting in the 1970s, he turned the church into a
source of cash, investigators and former and current Salvationists say,
by persuading adherents to donate to or invest their savings in his
growing number of companies.
Some of his businesses found a particularly captive market in his flock,
selling to his followers. In recent years, they marketed products
related to the church’s teachings such as green tea and even enema kits
to cleanse members’ bodies of impurities.
This type of approach gave him a source of cash in an era when South
Korea was still impoverished and was just beginning its so-called
economic miracle. Money for investment was hard to come by, so by using
church members as a source of capital, he was able to build factories
and companies at the same time that Samsung and Hyundai rose to
prominence, though he never matched their size.
By the 1980s, he had built a mini-chaebol, or family-run business group,
that over the years has included a dizzying array of products, from a
top-selling shark oil supplement and organic milk to cosmetics, auto
parts and special paint for nuclear plants.
He was recognized as a rising figure in the nation’s business world when
the military dictator Chun Doo-hwan visited one of his factories in
1984. Two years later, Mr. Yoo was suspected of using his growing
political connections to get into the business of operating passenger
vessels, with one of his companies winning the right to run tourist
boats on Seoul’s Han River when the city hosted the 1988 Summer Olympics.
Even then, Mr. Yoo’s vessels faced criticism for overloading. Once, when
his company tried to board more than twice one vessel’s maximum limit of
200 passengers during a busy holiday season, irate passengers almost
rioted, said Lee Cheong, a former Salvationist who worked as a crewman
on the boat. He said Mr. Yoo watched the melee impassively from the pier.
Crashing to Earth
Mr. Yoo’s ascent was halted in 1991, when he was arrested after the
deaths of 32 members of a splinter group from the Salvationists. They
were found dead in the attic of a factory cafeteria in 1987; some of
them had been hanged. An investigation by the police did not charge Mr.
Yoo in connection with the deaths, ruling them a mass suicide that
appeared to be a result of loans that the group could not repay.
But Mr. Yoo was convicted on charges of defrauding his church members by
improperly diverting money to his businesses, charges that he denied
until his death. He spent four years in prison, from 1991 to 1995.
The prison sentence, and the subsequent collapse of his business group
during the Asian financial crisis in the 1990s, were a fall from grace
from which few Koreans expected him to recover. But prosecutors say he
bounced back quickly upon release and found ways to avoid public scrutiny.
First, after his companies went bankrupt, he regained control of his
businesses by having his two sons buy back companies from receivership
at fire-sale prices after a government recovery program had forgiven
much of the debt, government officials and prosecutors say. With his
sons and a daughter, Mr. Yoo then linked these companies in a tight web
of murky cross-shareholdings that prosecutors contend Mr. Yoo controlled
by placing family members and loyal church believers in executive jobs.
“They mixed religion with business, pooling donations from church
members to use in buying and expanding businesses,” Lee Jin-ho, a
prosecutor, said during a hearing in June. “Management, key shareholders
and even internal auditors were all Salvationists, so there was no
system of check and control. If the Yoo family demanded money, the
companies complied.”
In a church sermon recorded in 2005, Mr. Yoo exhorted his followers to
stick together against what he called continued persecution for their
beliefs.
“Things are tough for us, and others treat us like rags, but we must
remember: ‘Blessed are you when people insult you, persecute you and
falsely say all kinds of evil against you because of me. Rejoice and be
glad,’ ” Mr. Yoo said, quoting from Matthew.
Prosecutors and financial regulators contend that Mr. Yoo and his family
invented increasingly creative ways to enrich themselves. One way was by
charging Yoo-controlled companies fees to use some of the more than
1,300 patents and trademarks that they claimed, many of which
prosecutors say were a sham. In one case, investigators say, Mr. Yoo’s
elder son, Dae-kyoon, 43, charged the ferry company, the Chonghaejin
Marine Company, $1.45 million for the right to use the name of one of
its own ferries. The other son owned the rights to the name Sewol, the
ferry that sank, though it was unclear if he ever charged the company to
use it.
At the same time, regulatory filings show, the Yoos owned no shares of
Chonghaejin, at least not on paper. But the ferry company’s largest
stockholder was a shipbuilding business, Chonhaiji Co., that in turn was
controlled by I-One-I Holdings, an investment company where Mr. Yoo’s
two sons are listed as controlling shareholders. The prosecutors also
say that behind the scenes Mr. Yoo acted as the chairman and chief
decision maker of the ferry company — which family representatives have
denied — and earned a salary of almost $10,000 a month.
Mr. Yoo was able to operate behind the scenes so effectively,
prosecutors said, because the ferry company’s chief executive, Kim
Han-sik, was a loyal church member who followed Mr. Yoo’s orders and hid
a 10 percent share of the ferry operator for Mr. Yoo under his name. Mr.
Kim recently admitted in court that he embezzled $131,000 from the ferry
company to pay consulting fees to Mr. Yoo’s brother.
Prosecutors say that Mr. Yoo and his two sons, or companies that they
controlled, received a total of at least $3.82 million from the ferry
company in recent years. On top of that, regulatory filings show, the
ferry company spent $2.5 million to buy stakes in other Yoo-affiliated
companies, including one that prosecutors say contributed to Mr. Yoo’s
art exhibits abroad.
But as money was being funneled to the Yoo family, the ferry company was
struggling financially, reporting a loss of $764,000 last year,
regulatory filings show — leaving little left over for the kind of
training and safety precautions that could have helped crew members
respond to the emergency on the Sewol.
Artistic Alter Ego
Of all the family’s schemes, prosecutors and financial regulators say,
the most elaborate involved the photographs taken by Mr. Yoo’s artistic
alter ego, Ahae.
The Yoos and their associates forced their own businesses, including the
ferry company, to buy his photos at inflated prices, pitching them as
good investments, prosecutors say. Church members also bought photos,
although some followers were skeptical that they would prove valuable in
the future, according to Mr. Yi, the Salvationist who is a spokesman for
the group.
Some supporters championed investing in Mr. Yoo’s photos in the hope
that prices would spike. But others, despite their qualms, bought the
photos to try to rehabilitate Mr. Yoo’s reputation — and, by extension,
their church’s.
“It has been a long grievance for us all these years, the bias against
our church,” Mr. Yi said. “We had expectations that if Ahae was
internationally recognized as a photographer and if people learned that
Ahae was actually Yoo Byung-eun, it may help dispel the misunderstanding
and prejudices against our church in South Korea.”
Previously unheard of, Ahae — an outdated term for child in Korean —
seemed to burst onto the art scene three years ago with the series of
exhibitions of his nature photos held at famous locations around the
world. The exhibit at the Louvre — in rented space in the museum’s
gardens — was paid for by Ahae Press Inc., a company in New York. Ahae
Press was run by Mr. Yoo’s younger son, Yoo Hyuk-kee, 41, who usually
goes by the name Keith. The rental of the space alone cost more than a
half-million dollars, and did not include the cost of a specially built
pavilion.
The traveling exhibit, sometimes called “Through My Window,” featured
photos taken every day for four years from a window in Mr. Yoo’s studio
in a wooded church complex south of Seoul, according to church members.
In a written statement in response to questions, the managing director
of Ahae Press, Michael Ham, said that Mr. Yoo took 2.7 million photos
from the same window in a project inspired by his prison stay, when he
viewed the outside world through a prison window.
Mr. Yoo, who in his guise as Ahae cultivated an air of mystery by only
allowing himself to be photographed from behind or the side, is
described by the website of Ahae Press as a sort of renaissance man: “an
inventor, entrepreneur, philanthropist, environmental activist, martial
artist, painter, sculptor, poet, and photographer.”
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