Indemnification

The government had to pay. And then someone had to pay the government. Everything rolls downhill.

In 2018, a Seoul court ordered the government of South Korea to pay out more than 500 billion won to families of those who died in the Sewol disaster in April, 2014. The government was held responsible for lax supervision, lax safety standards, a bungled rescue and the near absence of involvement from Blue House as the slow-motion disaster unfolded.

Facing such a gigantic financial loss, the government looked for a way to recoup. And it found ideal targets – the three grown heirs of Yoo Byung-eun, who the government erroneously said controlled the company that owned the Sewol. Yoo had been made a scapegoat by the Park administration in the days after the sinking.

The government filed suit in civil court. Yoo was named as a defendant but his three children were the real targets because it was impossible to go after Yoo himself: he was dead, his body found decomposed in an orchard three months after the Sewol sank. And under South Korean law, Yoo’s three heirs are legally responsible for all of their late father’s liabilities.

In January, 2020, a Korean court ruled that Yoo (and therefore his heirs) were responsible for 70-percent of the indemnification costs that the government had to pay the families of those who died. The court ruled Chairman Yoo was “the cause of the Sewol ferry disaster” because he had failed to adequately supervise the operations of the ferry company.

The court ignored the fact that Yoo did not own any stock in the ferry company and played no management role in its operations. The court engaged in an unprecedented extension of liability that – to our knowledge – has never occurred in the United States, deeming a third-party individual financially responsible for a tort committed by a company.  

There is one other glaring flaw in the court’s extension of liability to Yoo – no one knows the cause of the disaster.

Numerous investigations have failed to pinpoint it. In August 2019, an ambitious13-month investigation – dubbed the “hull” investigation because it was the first conducted after the wreck was raised — concluded that the cause of the accident could not be determined.

Yonhap News Agency reported that some members of the panel concluded that the sinking could have been due to problems with the ship while others said that external factors, such as collision with a submarine or other unknown objects, could not be ruled out. So, no final determination was made. (This is explored in more depth in the “No Known Cause” article on this website.)

Then in September, 2022, the most recent investigation came to a similar conclusion. The so-called  Social Disasters Commission again stated that a collision with an outside force could not be ruled out.

Naturally, there are different standards in civil versus criminal matters, yet the contradiction is hard to miss: we don’t know what caused the ferry to sink, yet we are blaming Yoo, even though neither he nor his family were involved in running the company, even though the cause of the accident has not been determined.

The heirs are currently appealing the decision.