[비즈한국] It has been found that Corestrand, a private company established in 2017 by Kwon Jae-hyun, an executive director at Bando Engineering & Construction and the eldest son of Bando Group Chairman Kwon Hong-sa, has continuously accrued debt without generating any revenue. Last year alone, Corestrand received nine separate loans from Executive Director Kwon, who holds a 100% stake in the firm, and Chairman Kwon Hong-sa also lent the company 4.5 billion KRW for operating funds. What is the story behind this?
Corestrand is a private firm founded in April 2017 by Executive Director Kwon Jae-hyun, the eldest son of Bando Engineering & Construction Chairman Kwon Hong-sa, with a primary business purpose of residential building construction. Executive Director Kwon established the company with a capital of 1.5 billion KRW, holds a 100% stake, and serves as the CEO. However, it has been found that the company has had zero revenue for over seven years and is in a state of capital erosion due to accumulated losses. As of the end of last year, its total capital stood at -1.6 billion KRW.
Despite this, Chairman Kwon and Executive Director Kwon continue to pour funds into the revenue-less Corestrand. According to the Data Analysis, Retrieval and Transfer System (DART), Chairman Kwon Hong-sa lent 4.5 billion KRW to Corestrand for operating funds in July 2022, which was repaid upon the expiration of the contract at the end of last year. Immediately upon repayment, he lent the 4.5 billion KRW back to Corestrand in the form of a short-term loan. Executive Director Kwon also lent the company 4.3 billion KRW as a short-term loan last year. This year, he has provided an additional 4.3 billion KRW through nine separate loans. Excluding the 2.943 billion KRW loan that matured on June 30 of this year, the total amount currently lent to Corestrand by the chairman and his son reaches a staggering 10 billion KRW.
The reason the chairman and his son continue to inject their own money into Corestrand is due to the 24 billion KRW mortgage loan taken out from a bank when Corestrand purchased the Aekyung Building in Guro-gu, Seoul, for 25.2 billion KRW in July 2022. According to last year's audit report, while Corestrand repaid 4 billion KRW of the 24 billion KRW bank loan, it borrowed money from the chairman and his son because it struggled to cover the interest on the remaining debt. In 2021, before the building purchase, annual loan interest was only around 7 million KRW, but it soared to 650 million KRW in 2022 and 1.5 billion KRW in 2023, increasing the financial burden. This has been fully reflected in the net loss, negatively impacting the company’s financial stability.
Regarding this, Bando Group explained, “We purchased the Aekyung Building for development projects. As we are currently in the preparation stage for development, there is no revenue at this time. The borrowings were incurred for the purpose of building management and maintenance costs.”