South Korea

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Ransomware Attack Disrupts Seoul Guarantee Insurance and Shakes South Korea’s Financial Sector
July 18, 2025 | Financial System

Ransomware attacks disrupted South Korea’s guarantee insurer and reverberated across the financial sector in mid-July 2025.

**Early on July 14, 2025, Seoul Guarantee Insurance (SGI) detected abnormal activity in its database, prompting a joint investigation with the Financial Security Institute and other specialized agencies.**
By Tuesday, investigators confirmed a ransomware intrusion, marking the first total system shutdown of a Korean financial institution and the second major ransomware incident affecting a Korean company in 2025.

**SGI, South Korea’s largest guarantee insurer, held a guarantee balance of 478 trillion won ($344.4 billion) at the end of 2024.**
It maintains the highest guarantee cap for jeonse loans—500 million won—outpacing other domestic institutions. Because the jeonse rental system relies on large, refundable deposits rather than monthly rent, it depends heavily on guarantee insurance, making SGI’s uninterrupted operation critical to the housing market.

**The attack knocked core systems offline for three days, halting guarantee-related services for mortgage loans, jeonse loans and mobile phone installment activations and preventing electronic issuance of guarantee certificates.**
To meet urgent customer needs, SGI branches resorted to manually issuing handwritten certificates and worked closely with banks and telecom companies to limit further disruption.

**SGI set up an emergency center to field consumer damage reports and support recovery efforts, while CEO Lee Myung-soon pledged full compensation for verified losses and responsible follow-up measures.**
On July 16, the company launched a dedicated Damage Report Center to receive and process claims, serving as the central point of contact for affected individuals and businesses.

**Industry observers suspect the attackers deployed a new ransomware variant called Gunra, first identified in April 2025.**
Gunra uses double-extortion tactics—encrypting data and threatening to leak stolen credentials. In June, the online bookstore Yes24 endured a similar attack that caused a five-day outage and roughly 10 billion won in losses.

**On July 17, SGI restored its core computer system and resumed electronic issuance of guarantee certificates.**
To clear a backlog—especially for jeonse loan guarantees—it redeployed all available staff to process and issue certificates promptly. The insurer also committed to working closely with lending institutions and telecom companies to ensure fulfillment of every request submitted during the outage.

**Since opening the Damage Report Center, SGI has received 55 reports.**
One confirmed case involved a landlord who incurred costs from a delayed jeonse loan; SGI will fully compensate upon document verification. The remaining reports include 47 cases of delayed guarantee issuance, two debt-repayment issues and five civil complaints.

**SGI has stated that no additional reporting procedures are required beyond submissions to the Damage Report Center.**
The company plans to proactively contact affected customers, expedite compensation and address any remaining inconvenience swiftly and transparently.
Fair Trade Commission Penalizes CJ Group for Unfair Support via Total Return Swaps
July 18, 2025 | Firms

South Korea’s Fair Trade Commission has sanctioned CJ Group and its affiliate CJ CGV for providing uncompensated support through total return swaps to their financially distressed subsidiaries.

**On July 16, 2025, the Fair Trade Commission imposed corrective orders and levied fines totaling approximately 6.541 billion KRW against CJ Group and CJ CGV for unfair support practices tied to their use of total return swaps (TRS) to back perpetual convertible bond issuances by CJ Construction and Simul Line.**
The FTC found that in 2015 the parent companies executed TRS contracts without charging compensation or securing conversion rights, shouldering the credit risk entirely and enabling the subsidiaries to raise funds at below-market interest rates despite their weak financial positions.

**CJ Construction suffered capital erosion and net losses with debt ratios well above industry norms from 2010 to 2014, while Simul Line also experienced capital erosion, net losses, and borrowing limits that left it unable to access capital markets on its own.**
By leveraging the higher credit ratings of CJ Group and CJ CGV, the TRS arrangements permitted these subsidiaries to issue perpetual convertible bonds at rates that saved them billions in financing costs. Internal documents indicated no intent by the parent companies to realize profits under the swaps, reinforcing the FTC’s conclusion that the support was unfairly uncompensated.

**Since its introduction in the mid-2000s, TRS has been regarded in South Korea as a legitimate capital-raising instrument, and the Financial Supervisory Service previously permitted its use without regulatory objection.**
A 2014 FTC case involving Korean Air and Hanjin Shipping featured compensated TRS arrangements. In contrast, the CJ sanction reflects the commission’s stance that when financially distressed affiliates rely on TRS, parents must receive equitable compensation for the risk they bear under the Fair Trade Act’s unfair-support provisions.

**CJ Group has contested the ruling, arguing that the transactions fell within legitimate parent-subsidiary financing practices exempt under the Fair Trade Act, that the subsidiaries’ financial strains were temporary and manageable without the swaps, and that no market distortion occurred given the affiliates’ noncompetitive sectors.**
The group further asserts that the FTC misinterpreted TRS usage as an unfair impediment to competition, noting the act permits capital injections by parents into subsidiaries without classifying them as unfair support.

**The ruling has raised concern among business circles about potential ripple effects, as numerous large South Korean conglomerates—including Hanwha Group, KT, Shinsegae, Lotte, and E-Land World—have collectively engaged in TRS-backed capital issuances totaling roughly 2.8185 trillion KRW as of May 2024.**
Observers warn that if the FTC applies the same criteria broadly, it could trigger a wave of investigations and penalties, introduce uncertainty into corporate financing strategies, and dampen the appeal of TRS as a capital-market tool.

Monitored Intelligence for South Korea - July 18, 2025


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Umbrella labor group launches large-scale strike

Joongang Ilbo | English | News | July 18, 2025 | Strikes and Work Stoppages

On July 16, 2025, the Korean Confederation of Trade Unions (KCTU), a major umbrella labor group representing 1.2 million members, launched a large-scale two-day strike demanding the government enact a pro-labor act. The strike began with a rally at Yeouido in western Seoul, where around 4,500 people gathered despite heavy rain, with similar rallies held in 12 other regions. The KCTU had initially expected participation of about 10,000 members in Seoul and 30,000 nationwide. Another significant rally and march are planned for July 19 in central Seoul.

The KCTU's primary demand is the revision of Articles 2 and 3 of the Labor Union Act, known as the "yellow envelope law," which would limit companies' ability to claim damages for legitimate labor union disputes. Although the legislation had passed the National Assembly twice, it was vetoed by former President Yoon Suk Yeol due to opposition from business groups and the People Power Party. The union claims that the proposed law would protect workers from employer reprisals and decrease employer complaints about illegal strikes.

In addition to the Labor Union Act revisions, the KCTU calls for broader labor reforms to safeguard the rights of platform and special-contract workers and to address growing social inequality. The union also urges the Lee Jae Myung government to reverse the previous administration's policies, which it describes as anti-labor.

폭염대비 농촌 외국인근로자 일터 긴급점검…"2시간 근무, 20분 휴식 의무"

Emergency Workplace Inspections for Foreign Workers in Rural Areas to Prepare for Heatwaves… Mandatory 2 Hours Work, 20 Minutes Rest

Money Today | Local Language | News | July 18, 2025 | Extreme Weather Events

Starting July 17, 2025, the Ministry of Employment and Labor, in collaboration with local governments, will conduct emergency inspections for one month at farms employing foreign workers under the Employment Permit System (E-9 visa) in rural areas. This initiative aims to protect foreign workers, who are vulnerable to heat-related illnesses due to extensive outdoor labor during the summer heatwaves.

The inspections will involve joint teams checking 150 vulnerable workplaces, with the potential to expand based on self-check results. Farms will be encouraged to self-assess and improve working conditions voluntarily before inspections. Workers and employers will receive guidance on the "5 Basic Heatwave Safety Rules" in 17 languages, which include providing cool water, cooling devices, mandatory rest periods of 20 minutes every 2 hours during heatwaves above 33°C, supplying cooling packs, and emergency procedures for heat illnesses.

The teams will ensure the presence of shade shelters, cooling equipment, and necessary support while also offering information on applying for government heat-related illness prevention support. Worker accommodations will be inspected with increased attention to fire safety and cooling facilities, reflecting heightened concerns after a recent dormitory fire incident in Muan, Jeonnam.

Multilingual counselors and interpreters will assist during inspections to communicate safety rules effectively to foreign workers. The Ministry will also monitor heat-related illnesses through the foreign worker support system separately. Vice Minister Kwon Chang-jun emphasized the significance of community-based inspections and the commitment to safeguarding foreign workers' safety both at work and in their living environments.

Heavy rains expected to soak Seoul, central regions

Yonhap | English | News | July 18, 2025 | Extreme Weather Events

The Korea Meteorological Administration (KMA) forecasted heavy rainfall across South Korea from July 16 through July 17, 2025, with southern Gyeonggi Province expecting downpours exceeding 200 millimeters per hour. The greater Seoul area and parts of Chungcheong Province were predicted to receive 50 to 150 millimeters of rain, while Jeolla provinces would see 20 to 100 millimeters and Gyeongsang provinces 30 to 100 millimeters.

A heavy rain advisory was issued for Seoul at 5 p.m., indicating expected rainfall exceeding 60 millimeters in three hours or 110 millimeters in 12 hours. In response, the Interior Ministry activated a Level 1 operation of the Central Disaster and Safety Countermeasures Headquarters for Seoul and Chungcheong Province as of 3 p.m.

Vice Interior Minister Kim Min-jae urged authorities to take comprehensive measures to minimize damage and prevent casualties. The public was advised to stay informed about the weather and avoid hazardous areas, such as landslide-prone zones and underground facilities.

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