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The Full Story of Moa Construction, a Company Owned by Former Deutsch Motors Chairman Kwon Oh-soo’s In-laws, and its Failed Urban Housing Project

[비즈한국] Moa Construction, a company whose largest shareholders are the in-laws of former Deutsch Motors067990 Chairman Kwon Oh-soo, is embroiled in a dispute with a subcontractor over unpaid construction costs. Moa Construction had planned to develop urban lifestyle housing in Dogok-dong, Seoul, but the project collapsed due to financial difficulties. It failed to pay the subcontractor that carried out foundational work, such as building demolition, and the subcontractor is now exercising a lien on the construction site.

Established in 2018, Moa Construction is a construction firm with the in-laws of former Chairman Kwon as its major shareholders. As of the end of last year, Chairman Kwon’s wife and brother-in-law held 32% and 48% stakes in Moa Construction, respectively. The proportion of Moa Construction’s revenue generated from Deutsch Motors affiliates was 100% in 2022, 99.99% in 2023, and 100% in 2024.

Moa Construction purchased the property in Dogok-dong, Gangnam-gu, Seoul, in April 2022. The plan was to demolish the existing building and develop urban lifestyle housing. In June 2022, Moa Construction added the following to its business objectives: real estate development, sales, and management operations; housing construction, sales, leasing, and distribution; maintenance of apartment complexes and facilities; and real estate sales and leasing agency services.

However, the Dogok-dong project did not proceed as planned. Although the existing building was demolished in 2022, the urban lifestyle housing was never built due to difficulties in securing funds. Moa Construction entrusted foundational work, such as demolition, to Company A, but failed to pay the construction costs, leading Company A to exercise a lien on the site. A lien is a right that allows a person in possession of another’s property to refuse to return it until a claim arising from that property has been satisfied.

As of the end of last year, Moa Construction’s debt-to-equity ratio reached 16,658.99%. While its total liabilities were 20.1 billion KRW, its total equity was a mere 100 million KRW. Furthermore, due to interest expenses, the company recorded a net loss of 2.65666 billion KRW last year, meaning it lacked the capacity to pay the construction costs.

Moa Construction has reportedly handled interior work for Deutsch Motors dealerships in the past. Its revenue fell by 33.65% from 23.8 billion KRW in 2023 to 15.8 billion KRW in 2024; since interior renovations are not typically performed annually, it appears that demand from Deutsch Motors has also declined. Under these circumstances, it is interpreted that pushing forward with the ill-fated urban lifestyle housing project severely worsened Moa Construction’s financial health.

In its 2024 audit report, the accounting firm Seongji stated, "We were unable to obtain sufficient and appropriate audit evidence regarding project financing (PF) loans and accrued interest, which exceed 90% of the company’s total assets," and added, "If legal proceedings, such as lawsuits for performance or applications for payment orders, are initiated against the company (Moa Construction) as the joint guarantor of the PF loans, it would cast significant doubt on the company’s ability to continue as a going concern."

Ultimately, Moa Construction sold the Dogok-dong site to a religious organization (Group B) this May. However, it still failed to resolve the unpaid construction costs owed to Company A. Company A is currently still exercising its lien on the Dogok-dong site. An official from Company A stated, "I am aware that we have not received the construction payments from Moa Construction," but added, "I will check with our representative and get back to you," though no follow-up contact was made. BizHankook also attempted to reach Moa Construction and the religious organization multiple times via phone and email but received no response.

Former Chairman Kwon Oh-soo is accused of colluding with figures including First Lady Kim Keon-hee to manipulate Deutsch Motors' stock prices. In April of this year, the Supreme Court sentenced the former chairman to three years in prison, suspended for four years, and a fine of 500 million KRW for violating the Capital Markets Act. The special counsel team investigating the Kim Keon-hee case (Special Prosecutor Min Joong-ki) is currently investigating whether First Lady Kim Keon-hee participated in the Deutsch Motors stock manipulation. On August 3, the former chairman was summoned for questioning.