It was revealed that MBC lost all of its investment of 10.5 billion won after investing in a Las Vegas resort development fund. The Board of Audit and Inspection (BAI) revealed that MBC’s largest shareholder, the Broadcast Culture Promotion Association (BCA), which should have supervised this, was only informed of the fact after the entire investment was lost, and did not demand accountability for those responsible. The BIA concluded that BCA neglected MBC’s poor management, and expressed concern that “there is a high possibility that it will neglect management and supervision in the future.”
●MBC invests 190 billion won in ‘real estate alternative fund’ without board approval
The Board of Audit and Inspection released this content in the audit report on Bangmoonjin on the 11th. The Board of Audit and Inspection has forwarded to the prosecution investigation reference materials for suspicion of dereliction of duty and other charges regarding MBC and its affiliates who are suspected of reckless management that harms the company’s interests. The Board of Audit and Inspection also forwarded investigation reference materials to the prosecution for Bangmoonjin officials who refused to submit materials related to MBC, on suspicion of violation of the Board of Audit and Inspection Act and the Public Records Act.
The Board of Audit and Inspection had previously begun an audit of Bang Moon-jin after 477 people, including members of the National Coalition for Fair Media, a coalition of minority unions at MBC and KBS, requested a national audit. According to the Board of Audit and Inspection, MBC decided at its 2019 executive meeting to actively manage the 484.9 billion won in proceeds from the sale of its Yeouido building, unlike before when it had focused on investing in financial products, and decided to invest in real estate alternative investment products with the approval of the headquarters director. After that, MBC invested 10.5 billion won in the ‘Las Vegas Resort Fund’, which invested in the construction of a resort in Las Vegas, USA, starting in July 2019. The contract that MBC signed at the time included a ‘DIL (Deed in Lieu)’ clause that stated that if the debtor, the resort developer, transferred assets to JP Morgan, the ‘senior creditor’, it would not have to pay off the remaining debt. Ultimately, it was an ‘ultra-high-risk investment’ that could have resulted in a full loss for MBC, the ‘mid-priority creditor’. Ultimately, the resort developer declared ‘default’ and abandoned the project in June 2020, and MBC lost all of its investment as senior creditor JP Morgan took over all of the developer’s assets.
The Board of Audit and Inspection, which estimates that MBC invested 190.5 billion won in high-risk real estate alternative funds, more than 8% of total assets, believes that there is a possibility that the remaining investments also suffered significant losses. However, the Board of Audit and Inspection stated that there were limitations in determining the exact amount of losses, as “MBC and Bang Moon-jin did not submit executive meeting discussion materials related to domestic and international real estate alternative investment product investments, legal due diligence reports on resort fund investments, etc.”
It was revealed that Bang Moon-jin, who should have been supervising the mismanagement, was not briefed by MBC on the fact of the real estate alternative investment even until February 2021, when MBC lost the entire 10.5 billion won in the ‘resort fund’ investment. Only after a director of Bang Moon-jin asked in March 2021, “I saw it in the article,” if there was any fact of the real estate alternative fund investment, did MBC report, “We treated the resort fund investment as a loss and made about 20 real estate alternative investments.” However, in August of the same year, when the terms of the Bang Moon-jin directors expired and new board members were elected, this issue was also swept under the rug. The Board of Audit and Inspection stated that it has not been confirmed that the newly inaugurated board of directors demanded institutional improvements or accountability of the relevant management regarding MBC’s investment losses until June 2023.
● Bang Moon-jin, MBC subsidiary ‘loss of 10 billion won’, but “I’ll see and hear about it later”
The audit also confirmed that MBC Plus, a subsidiary of MBC, had poorly promoted the ‘Indoor Sports Theme Park’ project in Yeosu, South Jeolla Province and Incheon in 2018, resulting in a loss of 10 billion won. The Board of Audit and Inspection also pointed out that the Bangmoon team did not properly supervise the process.
MBC Plus has been pushing forward with a business to jointly operate an indoor sports theme park in Jeonnam since May 2018. However, the company doing the joint business did not properly install the theme park facilities, so the theme park was not operated properly. MBC Plus did not take appropriate measures such as filing a lawsuit for damages against the company, even though it paid nearly 1 billion won in rent every year. The Board of Audit and Inspection revealed that the MBC Plus business team leader and team members who led the business had several drinking parties with the company officials at a Gangnam entertainment bar when they were jointly operating a theme park in Incheon.
Bang Moon-jin found out later that MBC had pushed forward with this development project without prior consultation with Bang Moon-jin. According to the Board of Audit and Inspection, some of Bang Moon-jin’s directors expressed the opinion that “an accusation is necessary,” but Chairman Bang Moon-jin concluded the meeting by saying, “I will hear a report from the MBC headquarters director on how this issue was handled later.” Afterwards, Bang Moon-jin received a report from MBC that it had issued a disciplinary warning and an institutional warning to the subsidiary’s CEO and the director in charge, and accepted it without much objection. The Board of Audit and Inspection reported that since the MBC executives reporting to Bang Moon-jin at the time were people involved in the progress of this project, Bang Moon-jin, as the controlling shareholder, should have actively managed and supervised it.
The Bangmoonjin side reportedly stated to the Board of Audit and Inspection that “the reason Bangmoonjin exists is to ensure that MBC can maintain broadcast independence, and not to control specific management activities.” However, the Board of Audit and Inspection, which believes that Bangmoonjin has the authority to manage and supervise MBC’s management under the current Bangmoonjin Act and the Commercial Act, pointed out that “they have neglected related duties,” and “there is a high possibility that they will continue to neglect management and supervision in the future.”
Reporter Kodo Yea [email protected]
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2024-09-12 21:55:31