이 기사는 2022년 02월 15일 08:05 thebell 에 표출된 기사입니다.

An explosion at a chemical plant of Yeochun NCC, a joint venture between Hanwha Solutions Corp and Daelim Group’s DL Chemical, could be the first case which leads to punishment of the company’s top executives under South Korea’s strengthened disaster law, possibly becoming a precedent for accidents involving joint ventures.

On Friday morning, an explosion occurred at Yeochun NCC’s Plant 3 in Yeosu, South Jeolla Province, killing four people and injuring four others. The company said the explosion occurred while workers were conducting a pressure test on a heat exchanger.

As the explosion killed more than one person, it is classified as a severe industrial accident under the Severe Disasters Punishment Act, which passed the National Assembly last year and went into effect on January 27, 2022.

The new law imposes criminal penalties, such at least one year of imprisonment and up to 1 billion won ($833 million) in fine, on a company’s owner or chief executive who violates safety and health regulations. The law is stricter than the nation’s industrial safety and health act as it holds top executives accountable for severe industrial accidents instead of business entities.

“An investigation is underway at Yeochun NCC’s plant on whether there was any violation of safety and health rules,” a representative for the labor ministry’s severe industrial accident department said.

Industrial watchers are also paying attention to, if Yeochun NCC did violate safety and health rules, which executives of the company would be punished under the new law because that could set a precedent for similar cases in the future.

Yeochun NCC was owned 50% each by Hanwha Solutions and DL Chemical as of the end of September 2021, with the joint venture run by two co-chief executives named by each parent company.

The country’s labor ministry said in a guideline for enforcing the new rules that if two or more top executives represent the company and have the power and responsibility to oversee the business, all of them can be deemed responsible for the management of the company.

But there is also a possibility that one chief executive who is more directly involved with a severe accident than the other could be penalized more harshly. The guideline said that in case of existence of two or more chief executives, such things as roles and responsibilities and the company’s decision-making process will be considered comprehensively to decide who makes the final calls.

Joint venture’s parent companies

Another point to watch is whether the new law will hold the joint venture’s parent companies accountable for the accident.

Yeochun NCC is a key subsidiary of both Hanwha Solutions and DL Chemical, with its ethylene production capacity of more than 2.28 million tons a year, the country’s third largest after LG Chem and Lotte Chemical.

The joint venture generated 449.7 billion won in operating profit on revenue of 4.64 trillion won in the first three quarters of last year. It also has paid dividends of 330 billion won to 340 billion won each year to its parent companies.

“We need to investigate the overall decision-making process to conclude (whether the company is run separately from its parent companies),” said the labor ministry’s representative, adding that the likelihood of parent companies’ CEOs being penalized would be low.

Meanwhile, Hanwha Solutions denied any possibility of it being involved in the accident at Yeochun NCC’s plant.

“Yeochun NCC has been managed independently as it was founded as a joint venture, and therefore Hanwha Solutions has nothing to do with the recent accident,” an official at Hanwha Solutions said. (Reporting by Kyung-ju Lee)