Court Rules Lawful to Recover W280 Billion in Funds from Taean Oil Spill Recovery Groups

A court has ruled that organizations established to recover from the 2007 oil spill in Taean, South Chungcheong Province, must return approximately 280 billion won in funds.

It was revealed that these organizations barely carried out the public interest projects for which they were established, instead using the funds for operating expenses such as executive and employee salaries.

The 31st Civil Settlement Division of the Seoul Central District Court (Presiding Judge Nam In-soo) recently delivered a partial ruling in favor of the plaintiff in a lawsuit filed by the Community Chest of Korea (Fruit of Love) against the West Coast Federation and the Hebei Social Cooperative, seeking the return of distributed funds.

The court ordered the foundation to pay approximately 100.1 billion won and the cooperative to pay approximately 185 billion won to Fruit of Love, respectively.

On December 7, 2007, in waters near Taean-gun, South Chungcheong Province, a crane barge belonging to Samsung Heavy Industries collided with a Chinese-flagged oil tanker, resulting in a spill of 12,547 kiloliters of crude oil.

In February 2016, Samsung Heavy Industries agreed with 11 groups of affected residents to deposit a regional development fund of 290 billion won to Fruit of Love, a legally designated donation organization.

That same year, the affected resident groups established the foundation and the cooperative with the aim of using the funds for public interest projects, such as revitalizing the local economy.

Resident groups from Taean-gun, Seosan, Seocheon-gun, and Dangjin established the cooperative, while groups from Boryeong, Sinan, Yeonggwang, Hongseong, Gunsan, Buan, and Muan established the foundation, and they received shares of the regional development fund in November 2018.

However, around 2021, criticisms emerged in the local community that the foundation and the cooperative were not properly managing the distributed funds, leading to audits by the Ministry of Oceans and Fisheries and the Board of Audit and Inspection.

The audit results revealed problems such as the improper execution of executive and employee travel expenses, unnecessary borrowing, and delays in forming the delegate assembly.

Subsequently, Fruit of Love notified them in August 2023 of the recovery of the remaining distributed funds, but when the two organizations objected, it filed a civil lawsuit.

The court accepted virtually all of the arguments put forward by Fruit of Love.

It pointed out that as of the end of 2021, the foundation's cumulative execution amount was 4.6 billion won, accounting for only 4.4 percent of its total distributed funds, and out of that, 3.0 billion won went toward institutional operating expenses such as personnel costs for executives and employees.

It was also found that the cooperative's cumulative execution amount as of the same period was 15.8 billion won, representing just 7.8 percent of the total, with 9.4 billion won used for institutional operating expenses.

The court explained, "It appears that the foundation was operated in a direction where executives and employees exhausted interest income generated from the distributed funds under the guise of personnel expenses and other costs, rather than completing the objective projects within the project period."

It further noted, "The cooperative's delegate assembly failed to function due to internal strife, and with substantial conflicts existing between the headquarters and its branches as well as within the headquarters itself, projects could not be properly pursued."

The court stated that the business plans of both the foundation and the cooperative were also considerably flimsy, declaring, "Fruit of Love's measure to recover the distributed funds is lawful."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.