Korean financial crisis hits Rev. Moon's empire

Pittsburgh Post Gazette/December 6, 1998
By Jonathan Watts

Tokyo -- Overturning governments and ravaging industries, the Asian economic crisis now threatens to undermine one of the region's most prominent religious leaders: the Reverend Sun Myung Moon, head of the Unification Church.

Moon saw his vast South Korean business empire collapse last week under a mountain of debt. It is the latest in a series of spectacular set-backs for the self-proclaimed messiah, who once boasted the adoration of hundreds of thousands of believers around the world.

Four companies in Moon's Tong Il (Unification) Group filed for court protection after failing to keep up bank loan repayments. Analysts say the demise of the four -- Tong Il Heavy Industries, Hankook Titanium, Il Song Construction and Il Shin Stone -- will lead to the breakup of the group, once one of South Korea's 30 biggest chaebol (family-owned conglomerates).

The suddenness of the collapse was shocking, not least because it was sparked by the failure of Tong Il Heavy Industries to make payments on a $167,000 loan. But trouble has been brewing from some time.

At the end of last year the group's 17 companies had a combined debt of $1.2 billion, 19 times their equity value.

It is a far cry from the heyday of Moon's empire. In 1990 the Unification Church was said to have land holdings worth more than $1 billion, as well as factories and a chain of small stores.

Its assets overseas included shares in the Washington Times and car plants in China and Vietnam.

Behind its success was a vast pool of cheap labor. Believers -- often referred to as "Moonies" -- reportedly worked 12 hours a day for low wages, producing and packing items ranging from ginseng to stone pagodas.

But the markets and loans dried up as Asia plunged into financial turmoil. In recession-hit Japan, consumers have less money to spend on religious trinkets. South Korean banks have also reined in credit since Seoul was forced to go cap in hand to the International Monetary Fund for a $58 billion bail-out last December.

The difficulties facing the Tong 11Group have grown increasingly apparent since May, when one of its member firms - the Il Hwa soft drinks maker -- went out of business. This was followed by an embarrassing failure to win the right to develop a tourist resort in North Korea.

Moon, who was born in North Korea, has gone to great lengths to build links with Pyongyang. In 1991 he struck a deal with the late North Korean leader, Kim Il-sung to build a resort near Mount Kumgang. His plans to start package tours to the area ran aground because of financial concerns about Tong Il. The right to operate the service was awarded to Hyundai, South Korea's largest chaebol.

Throughout his life, the 78-year- old Moon has bounced back from setbacks, including a 1982 conviction for tax evasion in the United States and repeated allegations he is brainwashing his followers. But rebuilding his empire is likely to prove more difficult this time around.

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