Importer disposed of seafood worth about 480 million won held as bank collateral; freight agent issued delivery orders without bills of lading to help carry out the scheme. Prosecutors twice demanded supplementary investigations from police before conducting their own probe and indicting both suspects.

Prosecution flags fly outside the Supreme Prosecutors' Office building in Seocho-gu, Seoul. [Yonhap]
Prosecution flags fly outside the Supreme Prosecutors' Office building in Seocho-gu, Seoul. [Yonhap]

By Yang Geun-hyuk, The Herald Business

A seafood importer and a freight forwarding agent have been indicted on charges of conspiring to divert and dispose of approximately 480 million won (about $314,000) worth of seafood pledged as collateral to a bank.

Police had initially declined to refer the freight agent for prosecution, but prosecutors pushed for reinvestigation and ultimately conducted their own supplementary probe before indicting both men together.

The Seoul Central District Prosecutors' Office, Criminal Division 5 (chief Jeong Jae-sin), indicted the importer, a man in his 50s identified as A, and the freight forwarding agent, a man in his 60s identified as B, on charges of breach of fiduciary duty on May 22. Neither was taken into custody.

A had entered into a foreign exchange transaction agreement and an assignment-collateral agreement with a bank identified as C, then used the bank's letters of credit to import roughly 480 million won worth of seafood from Chinese exporters. A letter of credit is a document a bank issues, at an importer's request, guaranteeing payment to an exporter under specified conditions. B allegedly stored the imported seafood at a warehouse at the port of discharge — the port where the cargo arrived and was unloaded from the vessel.

When A became unable to pay for the seafood imports, he allegedly used delivery orders issued by B to remove the seafood from the warehouse and dispose of it over roughly one month beginning in mid-August 2020 — all without having obtained the bills of lading from the bank. B faces the same breach-of-fiduciary-duty charge for issuing the delivery orders without first collecting the original bills of lading, a practice that is in principle illegal.

After completing an initial investigation, police referred A to prosecutors in June 2020 on charges of obstruction of the exercise of rights, while declining to refer B. Prosecutors concluded that B had likely participated in the scheme and in late August of that year asked police to reinvestigate. They also determined that the charge against A needed to be changed to breach of fiduciary duty and requested supplementary investigation accordingly.

Police reopened the case and, in line with the prosecutors' request, re-referred A under the revised charge of breach of fiduciary duty. They also reversed their earlier decision not to refer B, applied the same charge and forwarded his case to prosecutors.

When A and B denied the allegations — arguing that the parties had reached a mutual understanding in line with letter-of-credit practices and standard commercial customs — prosecutors determined that further investigation into the transaction process was needed and issued a second request for supplementary investigation. Police conducted another round of inquiries, but prosecutors concluded that the evidence gathered was insufficient to rebut the suspects' claims.

Prosecutors then launched their own supplementary investigation, questioning bank officials and others connected to the case and gathering evidence to substantiate the charges. Satisfied that A and B had clearly conspired together, they indicted both men.


yg@heraldcorp.com