Sunken South Korean Ferry Owner Blamed for 5 Previous Crashes

By YOUKYUNG LEE | July 2, 2014

In the same narrow waterways where more than 300 people died this spring aboard the ferry Sewol, another ship owned by the same company crashed into an oil tanker 11 years earlier. The ferry’s captain had chosen the difficult water path to cut a mere seven miles from its journey.

It was among five crashes, from 2003 to 2011, that government investigators blamed mostly on sailors of Chonghaejin Marine Co. ferries. Three of the incidents occurred within a 12-month span, and after those occurred, a government investigator chided the company for failing to make safety reforms.

None of the crashes caused fatalities, but together, some experts say, they were reason enough for regulators to suspend or even revoke the company’s license. That never happened. Chonghaejin was even allowed to expand by adding the Sewol to its fleet last year.

Chonghaejin’s punishment for those five failures: two one-month suspensions for sailors, three verbal warnings to captains, one verbal warning to the company and a fine of 7.5 million won ($7,400). The biggest fine that can be issued in ferry-safety cases is just 30 million won ($29,400).

The Korean Maritime Safety Tribunal, an arm of the Ministry of Oceans and Fisheries that serves as a maritime court, recommended safety changes to the company as well, but they were nonbinding.

After the 2003 oil-tanker crash, the tribunal asked that Chonghaejin stop using the Maenggol Channel. Maenggol – the name means “fierce bones” – consists of narrow passages between small islands and is known for having fast, strong currents.

But the shortcut saved the company money on fuel. The Sewol sank in the same channel, about 16 kilometers (10 miles) from the 2003 crash.

Chung Yeong-seok, a professor of maritime law at Korea Maritime and Ocean University, said South Korea could have and should have gone further than it did.

“Even though the current law is not strict, the maritime ministry, with its administrative power, could (cancel a ferry license) based on the tribunal’s findings. But it didn’t do it,” Chung said.

Prosecutors blame the CEO and four company employees for causing the April 16 Sewol sinking by overloading the ship with poorly stowed cargo after a risky redesign, and by neglecting safety in other ways. They also accuse 15 crew members of negligence and of failing to perform their duty to rescue passengers. All but one of the crew have pleaded not guilty, and lawyers for the other defendants have said the cause of the sinking remains unclear.

Chonghaejin’s license has been revoked, and authorities continue to search for the patriarch of the family that owns the company, 73-year-old billionaire Yoo Byung-eun.

The government has blamed its failure to prevent the disaster on the cozy ties between the industry and regulators. President Park Geun-hye has vowed to get rid of what she and South Korean media have called a “government mafia” consisting of retired public servants who work at private companies.

South Korea had reason not to revoke or suspend Chonghaejin’s license before the Sewol sank. The company had a monopoly on South Korea’s longest domestic sea route, the one between Incheon and Jeju that the Sewol was plying went it went down. A license suspension or revocation would have affected travel plans for thousands of people and transport for thousands of tons of cargo.

Monopolies, or near-monopolies, are the rule among South Korea’s roughly 100 coastal ferry routes. All but four of them are operated by either one or two ferry operators, according to Kwon Jun-young, a director at the Ministry of Oceans and Fisheries.

Officials said they did not know how many ferry licenses South Korea has revoked in recent years, but they added that it was a rare move.

“Canceling a license causes huge difficulties for island residents, so instead we impose fines and urge companies to take cautions,” Kwon said.

Ministry officials said the loss of Chonghaejin’s Incheon-Jeju ferries has been tough on residents and shipping companies, and that they are trying to find another company to take over the route.

Instead of taking disruptive measures against Chonghaejin, South Korean regulators chose gentler methods that had little apparent effect on safety.

The tribunal found Chonghaejin to be 80 percent at fault for the 2003 ferry-oil tanker crash, and asked the company’s sailors not to sail in the area again. The investigative report said the captain used the route to cut the length of the ship’s journey by 7 miles, and faulted the crew for not being careful as they attempted to move ahead of the tanker.

In 2006 and 2007, the Ohamana, a Chonghaejin car ferry that plied the same route as Sewol, was primarily responsible for three crashes, according to the tribunal. In two of the accidents, the tribunal gave the ship’s captain a verbal warning for setting sail despite strong wind or heavy fog. The tribunal said the third accident occurred while just one sailor was on the bridge of the ferry; it suspended the license of the first mate and asked the company to make improvements.

An official at Incheon Regional Maritime Affairs and Port Administration, the government agency that imposes fines and issues and revokes licenses to sailors and shipping companies, said he recalled Chonghaejin was penalized with 7.5 million won ($7,400) in fines after the last of those three accidents. The official, who spoke on condition of anonymity, citing department rules, said that was the only record of a fine on Chonghaejin that the office has. The Incheon office is part of the maritime ministry, but the ministry said it has no records regarding fines.

A 2008 report by a tribunal investigator following the 12-month run of accidents noted that Chonghaejin repeatedly failed to come up with reform measures and recommended that the company improve how it manages safety.

But problems continued. From 2009 to 2013, Chonghaejin was responsible for nearly 10 percent of maritime accidents among domestic South Korean ferries, even though its five ferries make up less than 3 percent of the overall fleet, according to the office of opposition lawmaker Kim Choon-jin, which analyzed ministry data. The six Chonghaejin accidents included one crash, one less serious incident of contact and four engine failures.

The crash, in 2011, involved the Chonghaejin ferry Democracy No. 5 and a fishing boat. The tribunal said the company was 60 percent responsible. The investigative body said the ferry maintained a speed of 22 knots (41 kph, 25 mph) even as it entered heavy fog.

Yet another accident involving a Chonghaejin ferry occurred just two weeks before the Sewol disaster. It remains under investigation.

The tribunal also blamed another company connected to Yoo’s family, Onbada Co., for two ferry accidents in 2001. Onbada was at the time owned by a son of Yoo’s and a woman local media identified as Yoo’s close aide, but its assets were sold to Chonghaejin in 2006.

Both accidents involved fires, one of which destroyed the ship involved, but no one was hurt. The tribunal said the ferry operator was negligent in managing the crew in both cases.

None of the findings against Chonghaejin and Onbada had any effect on Chonghaejin’s addition of the Sewol to its fleet last year.

The Incheon regional official said maritime accidents are not considered when the agency is asked to approve another ship on a company’s existing route.

The Sewol was a Japanese ferry that Chonghaejin bought and redesigned to accommodate more passengers. A Korean Register of Shipping inspector determined that the changes greatly lowered the ship’s cargo-carrying capacity, but port documents show that Chonghaejin ignored those new restrictions and routinely overloaded the vessel.

And why did the company buy the ship to begin with? It appears to have had something to do with keeping its monopoly on the Jeju route – the monopoly that, among other things, discouraged regulators from taking action over safety lapses.

Senior prosecutor Park Jae-eok told judges on June 10, during the first court hearing for the Sewol’s crew, that Chonghaejin expanded its fleet partly to stop a rival company from entering the business.

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