Hanbo Construction declared bankrupt

Hanbo Construction declared bankrupt

SEOUL (AFP): The construction arm of South Korea's failed Hanbo Group was officially declared bankrupt yesterday, a major creditor bank said.

Korea First Bank deputy director Lee Ha-Jung told AFP that Hanbo Engineering and Construction Co. Ltd. had defaulted for the second time on promissory notes owed to it worth 6.5 billion won (US$7.3 million) by the close of business yesterday.

Under South Korean law a firm becomes officially bankrupt after the second default. The first default was Thursday.

The bankruptcy brought to five the number of key subsidiaries of Hanbo, including its main steel-making flagship, to go out of business since the Hanbo Group crumbled in January under $5.7 billion of debt.

The collapse of the country's 14th largest conglomerate triggered a political uproar when prosecutors found it had obtained loans without collateral by bribing top figures in the government.

A former home minister, four MPs and two bankers were jailed and are now under trial along with the group's founder, Chung Tae-Soo and one of his executives.

The opposition has also accused a son of President Kim Young- Sam of being at the core of the scandal, although he was officially cleared by prosecutors.

Hanbo Engineering and Construction Co. is engaged in four major overseas contracts worth a total of $474 million -- a military barracks and a shopping and condominium complex in Indonesia, a highway project in Pakistan and a multi-purpose dam in the Philippines.