Only at Least 41 Billion Won of Optimus Investment Funds Can Be Recovered (Comprehensive Report 2)

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[Image source=Yonhap News]

[Asia Economy Reporter Koo Eun-mo] An accounting audit has revealed that the recoverable amount from the Optimus Asset Management fund, which has 500 billion KRW in investments locked up, is expected to be at least in the 7% range.

On the 11th, the Financial Supervisory Service (FSS) announced that Samil Accounting Corporation conducted an audit over approximately four months starting in July on 63 final investment destinations of the fund's invested capital, resulting in this assessment.

According to the final report submitted by Samil Accounting Corporation, out of the total 46 funds with a set amount of 514.6 billion KRW, 63 identifiable final investment destinations amounting to 351.5 billion KRW were identified. Samil Accounting Corporation explained that about 200 billion KRW, excluding the amount invested in the final destinations, was impossible to audit due to embezzlement or circular financing.

The audit firm classified the recoverability of the investments into three grades, and after calculating the expected recovery rates by asset, the estimated recovery rate ranged from a minimum of 7.8% (40.1 billion KRW) to a maximum of 15.2% (78.3 billion KRW) relative to the total fund size. Among the 351.5 billion KRW, the C grade, which is doubtful for recovery, accounted for 292.7 billion KRW (83.3%), while the A grade, fully recoverable (4.5 billion KRW), and B grade, partially recoverable (54.3 billion KRW), made up only 16.7%.

However, the FSS added that the expected recovery amount does not include two ongoing lawsuits related to project financing (PF) businesses worth 64.1 billion KRW, and depending on the lawsuit outcomes, additional recoveries may be possible.

The confirmed investment amount of 351.5 billion KRW consisted of 127.7 billion KRW in real estate project financing (PF) businesses, 137 billion KRW in stocks, 72.4 billion KRW in bonds, and 14.5 billion KRW in others. Regarding the real estate PF business, 59 billion KRW was invested in ongoing projects such as a development project in the Busan area worth 22.4 billion KRW, and 68.7 billion KRW was invested in non-progressing projects such as a used car sales complex worth 15.9 billion KRW. Stocks included 122.6 billion KRW invested in listed companies such as Company S and 14.4 billion KRW in unlisted companies such as Company D. Bonds comprised loans of 50 billion KRW to related companies including H Industry (23.4 billion KRW) and 22.4 billion KRW in loans to other general companies. Additionally, 14.5 billion KRW was invested in condominium revenue rights and others.

An FSS official explained, "Among the real estate PF investments, there are quite a few cases where the investors themselves were defrauded," adding, "Less than half of the projects are progressing properly; most are in situations where permits have not been obtained or final payments have not been made."

The FSS also plans to form a voluntary consultative body related to the calculation of the base price to fairly adjust the standard price reflecting the audit results. The consultative body will include the fund manager, former sales companies, administrative managers, trustees, and accounting firms to establish fair value evaluation methods for fund assets and fund transfer plans. It will operate from the 18th until the fund transfer is completed.

The FSS stated, "Regarding assets with unclear usage identified in the accounting firm's asset audit, we will actively cooperate with the ongoing prosecution investigation related to the Optimus fraud to maximize asset recovery," adding, "It is expected to take a considerable amount of time to confirm the amount of damages, and we plan to conduct legal reviews and prepare dispute resolution measures considering future inspection and investigation results."

In response, NH Investment & Securities claimed, "The asset recovery rate of the Optimus fund announced by Samil Accounting Corporation is not directly related to the actual compensation amount customers will receive." NH Investment & Securities explained, "The final compensation amount is determined not by the asset recovery rate but through the FSS complaint mediation results or lawsuits to determine responsibility," adding, "While acknowledging the objectivity of the conservative audit results by the FSS and Samil Accounting Corporation, if the standards estimated by NH Investment & Securities' customer asset recovery task force (TF) are applied, the total recoverable amount could be over 110 billion KRW, and the recovery rate could be up to about 9 percentage points higher than that of Samil Accounting Corporation."