CWB Questioned Over Scrutiny of Offshore Hotel Borrower’s History of Embezzlement, Illegal Transactions, Long-Term Impact of Hotel Boycott
For Immediate Release
VANCOUVER, BC — UNITE HERE is urging Canadian Western Bank (TSE: CWB) (“CWB”) to review whether its lending division was aware of financial crimes committed in South Korea by an officer of the Seoul-based company that owns Hilton Vancouver Metrotown and to evaluate financial risks posed by the hotel’s protracted lockout of its workers. In a recent letter to CWB’s board of directors, the union that represents workers at the hotel questioned the level of due diligence CWB may have conducted into hotel owner, DSDL Canada Investments, a subsidiary of Seoul-based DSDL Co.
DSDL is owned by members of the prominent and politically connected Cho family that founded South Korean conglomerate Hyosung Corporation, the world’s largest producer of spandex. DSDL’s Chairman, Cho Wuk-rai, was indicted for embezzling company funds from a Hyosung subsidiary and later sentenced to prison. He received a pardon the next year.
DSDL’s Chairman was convicted and sentenced to prison again in 2009 for setting up illegal loans between businesses he controlled which eventually led to the bankruptcy of two publicly traded companies. Mr. Cho received a special pardon by South Korea President Lee Myung-bak, to whom Cho is related through marriage. In 2010, the year after Mr. Cho received his second conviction, DSDL bought Hilton Metrotown.
Hilton Metrotown locked-out staff three months ago. The BC Federation of Labour issued a boycott against the hotel which is losing millions of dollars worth of current and future business as travel restrictions ease. DSDL’s hotels in Edmonton are also at risk of a boycott. DSDL’s failure to address the financial impact of the lockout should be cause for concern, particularly in light of the firm’s corporate history.
The letter asks whether CWB was aware of these convictions or if DSDL ever disclosed this material information to the bank. If CWB was informed, the union questions why the bank approved the loan and whether they extended loans to DSDL’s other Canadian businesses, including three Edmonton hotels acquired in 2017 and another in Quebec City acquired in 2019.
UNITE HERE is calling on CWB to undertake a proper due diligence review of DSDL and to re-evaluate whether lending to DSDL is worth the risk.
Contact: Michelle Travis, 778-960-9785, [email protected], or Stephanie Fung, 604-928-7356, [email protected].
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