Court: Taean oil spill recovery groups must return 280 billion won in funds

In fact, there is no purpose business, only covering operating expenses... “Refund measures are legal”

(Seoul = Yonhap News) Reporter Lee Young-seop = A ruling was made that organizations established in 2007 to recover damage from the Taean, South Chungcheong Province oil spill must return 280 billion won in funds.

It has been revealed that these organizations have spent the funds on operating expenses, such as executive and employee salaries, without actually carrying out the public service projects for which they were established for several years.

According to the legal community on the 10th, the Seoul Central District Court's Civil Agreement Division 31 (Chief Judge Nam In-soo) recently ruled in partial favor of the plaintiff in the lawsuit filed by the Fruit of Love Social Welfare Community Chest of Korea against the West Coast Association (hereinafter referred to as the Foundation) and the Hebei Social Cooperative (hereinafter referred to as the Cooperative) for the return of distributions.

The court ordered the foundation to pay 101 billion won and the cooperative to pay 185 billion won to the Fruit of Love.

On December 7, 2007, a Samsung Heavy Industries crane ship collided with a Chinese-flagged oil tanker in the waters near Taean-gun, South Chungcheong Province, causing a spill of 12,547 kL (kiloliters) of crude oil.

In February 2016, Samsung Heavy Industries agreed with 11 victim groups to donate 290 billion won in regional development funds to the Fruit of Love, a statutory donation organization.

That year, victim groups used this fund to establish foundations and cooperatives for the purpose of carrying out public projects such as revitalizing the local economy.

Victim groups in Taean-gun, Seosan-si, Seocheon-gun, and Dangjin-si established cooperatives, and local organizations in Boryeong-si, Shinan-gun, Yeonggwang-gun, Hongseong-gun, Gunsan-si, Buan-gun, and Muan-gun established foundations and received local development funds in November 2018.

However, in 2021, local communities pointed out that foundations and cooperatives were not managing their distributions properly, leading to an audit by the Ministry of Oceans and Fisheries and the Board of Audit and Inspection.

As a result of the audit, problems such as unfair execution of executives and employees' travel expenses, unnecessary borrowing, and delay in organizing the general meeting of representatives were revealed.

Accordingly, the Fruit of Love notified the remaining distribution amount to be recovered in August 2023, but when the two organizations objected, they filed a civil suit.

The court accepted virtually all of the Fruit of Love's claims.

In the case of the foundation, the cumulative execution amount as of the end of 2021 was 4.6 billion won, only 4.4% of the total distribution, and it was pointed out that 3 billion won of this was accounted for by institutional operating expenses such as executive and employee labor costs.

As of the same time, cooperatives also had a cumulative execution amount of 15.8 billion won, or only 7.8% of the total. Of the 15.8 billion won, 9.4 billion won was institutional operating expenses.

The court pointed out, “It appears that the foundation has been operated in a way that executives and employees use up interest income generated from distributions for reasons such as labor costs, rather than completing the purpose of the project within the business period.”

He also explained, "The cooperative's general meeting of representatives could not function due to internal strife, and there were significant conflicts between the headquarters and branches, as well as conflicts within the headquarters, so the project could not be promoted properly."

The court ruled that the business plan of the foundation and the cooperative was also quite poor and that “the action to recover the distribution from the Fruit of Love is legal.”