Export-Import Bank Credit Concentrated 10% on Hanwha Group... 13.2523 Trillion Won

Assemblyman Cha Gyugeun "Nearly Tripled Under Yoon Seok-yeol Government"
Hanwha Ocean & Aerospace Loan Balances Account for 36% of Top 10 Companies' Loan Balances
Hanwha Group Refutes, Calling It a Measure for Economic Development Aligned with Core Objectives

The Export-Import Bank of Korea has provided credit facilities to Hanwha Group exceeding 13.2 trillion KRW. This is a high level compared to other large conglomerates, accounting for about 10% of the bank's total outstanding credit balance.

According to data submitted by Assemblyman Cha Gyu-geun of the National Assembly's Planning and Finance Committee on the 20th, as of the end of August this year, the Export-Import Bank's outstanding credit balance was 135.6327 trillion KRW, with 13.2523 trillion KRW confirmed as credit extended to Hanwha Group affiliates.

Notably, the top 10 companies receiving credit support from the Export-Import Bank have an outstanding credit balance of 26.6392 trillion KRW, with Hanwha Group affiliates Hanwha Ocean and Hanwha Aerospace alone accounting for 9.5886 trillion KRW, or 36% of that total.

Credit extended by the Export-Import Bank to Hanwha Group affiliates has steadily increased since the inauguration of the Yoon Seok-yeol administration. It surged nearly threefold from 4.4747 trillion KRW at the end of December 2022 to 13.2523 trillion KRW at the end of August this year.

Assemblyman Cha analyzed that while Hanwha Group's acquisition of Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean) last year had an effect, the amount of new credit extended to Hanwha Ocean after the acquisition also reached 4.7223 trillion KRW, making it difficult to view the increase simply as a corporate merger effect. In April, when the Export-Import Bank anticipated that the credit exposure limit to a single borrower for Hanwha Group would reach the legal cap of 50%, it obtained an exemption approval from the Financial Services Commission. Additionally, in February, the bank increased its statutory capital to support defense exports.

Furthermore, Assemblyman Cha pointed out that several former prosecutors have been re-employed by Hanwha Group under the current administration. It was revealed that between 2022 and 2023, eight former prosecutors and investigative officers moved to major Hanwha Group affiliates. Cha Soon-oh, a former senior secretary for political affairs at the presidential office and a ruling party official, was also appointed as the standing auditor of the Export-Import Bank.

Assemblyman Cha stated, "If credit from export credit agencies is overly concentrated on specific companies, it can raise fairness concerns," adding, "It is also undesirable from the perspective of credit risk management."

In response, the Export-Import Bank rebutted Assemblyman Cha's claims, stating that a significant portion of the credit involves Refund Guarantees (RG), and that allegations of preferential treatment toward Hanwha are unfounded. Hanwha Group also argued in reference materials released the same day that the Export-Import Bank's support for guarantees related to Hanwha Ocean, Hanwha Aerospace, and Hanwha Construction's Iraq construction projects aligns with the bank's core mission to promote national economic development and does not constitute preferential treatment of large corporations.

According to Hanwha Group, the 13.2 trillion KRW credit balance disclosed by the Export-Import Bank includes 7.5 trillion KRW for Hanwha Ocean, 2.1 trillion KRW for the defense sector (Hanwha Aerospace), and 3.6 trillion KRW for guarantees related to Hanwha Construction's Iraq construction projects, as well as payment guarantees for Hanwha Solutions and Hanwha Energy's eco-friendly energy businesses.

A Hanwha Group representative explained, "The credit balance for Hanwha Group's defense affiliates has naturally increased alongside a significant rise in global defense exports. In particular, contracts related to defense exports, such as performance guarantees and refund guarantees, require guarantees from policy banks to enable large-scale exports. When comparing the support scale relative to export volume, there is no significant difference in credit balances between Hanwha Group's defense affiliates and other domestic defense companies." The representative added, "The export support for Hanwha Aerospace's Egypt project was approved under the previous administration and cannot be seen as preferential treatment by the current government."

Regarding the recruitment of former prosecutors, Hanwha Group also denied the allegations. It stated that in 2022, three former prosecutors joined: two as outside directors and one as an employee. The outside directors serve as legal experts on the boards of ㈜Hanwha, Hanwha Impact, and Hanwha General Insurance, overseeing and advising on management status, while the insurance employee is responsible for preventing insurance fraud.

The Hanwha Group representative added, "Among those who joined in 2023, except for one deputy manager at Hanwha Aerospace supporting audit tasks, all are affiliated with Hanwha Solutions, Hanwha Systems, and Hanwha General Insurance, performing duties unrelated to Export-Import Bank credit. The recruitment of former prosecutors is part of the company's normal talent acquisition efforts and not intended for any specific purpose."