Posted on September 5, 2023
Police in Seoul have raided the offices of Polaris Shipping, the operator of the ill-fated bulker conversion Stellar Daisy, in connection with alleged breach of trust. The new round of law enforcement attention comes just as the company’s owners were preparing to sell the firm.
On August 28, the Seoul Metropolitan Police’s Financial Crimes Investigation Unit dispatched a team to Polaris’ headquarters with orders to seize record books and computer hard drives with data on the firm’s accounts. The authorities suspect that the firm’s co-CEOs – Kim Wan-joong and Han Hee-seung – extracted about $38 million from Polaris’ holding company, Polar Energy & Marine. The alleged transactions took the form of loans and were used “arbitrarily” to secure management rights, the Seoul police said.
Kim already faces criminal charges in connection with the sinking of the Stellar Daisy. He was convicted of failing to report known defects aboard the vessel in 2020, and was sentenced to six months in prison. The case is currently on appeal at South Korea’s supreme court. In 2022, he was also indicted on charges of negligence and “ship-burying” in connection with the case.
Polaris was put up for sale in May, and about 20 firms have expressed interest, according to Chosun Daily. The value of the transaction is estimated at about $425 million. A sale would also buy out the firm’s second-largest shareholders, NH Private Equity and Aeneas Private Equity.
Polaris is a leading owner of very large ore carriers (VLOCs), the super-large bulkers used to transport iron ore from Brazil to East Asia. It has 15 ships in this size category, and it holds valuable contracts with some of the world’s largest ore mining companies and ore importers.
The firm came under intense scrutiny after the sinking of the Stellar Daisy, an aging VLCC-to-VLOC conversion that suddenly disappeared in the Atlantic in March 2017. The flag state, the Marshall Islands, determined that “catastrophic structural failure” was the cause of the casualty. Extensive cracking in the hull was identified as early as 2011, six years before the sinking.
Polaris sold its last VLCC-to-VLOC conversions for scrap in 2021, bringing its exposure to this vessel class to a close.