South Korean President Park Geun-hye

Seoul - South Korean President Park Geun-hye revamped her cabinet on Friday, replacing seven ministers in response to intense criticism over her administration's handling of April's ferry disaster.

It was Park's first major cabinet shake-up since taking office in February last year and came as the mother of one disaster victim filed a damages suit against the government, as well as the ferry operator.

The most high-profile change will see Choi Kyoung-Hwan, a ruling party lawmaker, replacing Hyun Oh-Seok as finance minister in charge of the economy, the presidential Blue House said.

Park named six other new ministers responsible for security, education, labour, culture, gender equality and science.

Chong Jong-Sup, a Seoul National University law professor, is to head the ministry of security and public administration, which will take the lead in implementing promised reforms following the Sewol disaster, which claimed nearly 300 lives, mostly schoolchildren.

The tragedy stunned South Korea, knocking the entire country off its stride and unleashing a wave of public anger, as it emerged that incompetence, corruption and greed had all contributed to the scale of the disaster.

Park's administration was sharply criticised over its response, prompting her to dismantle the coastguard and order a major overhaul of national safety standards and procedures.

Earlier this week, Park nominated a new prime minister to replace Chung Hong-Won, who was forced to resign over the Sewol tragedy.

The president also named a new director of the domestic spy agency, the National Intelligence Service.

The reshuffle came as the mother of one student victim from the Sewol filed a lawsuit seeking damages from the government and the company that owned and operated the ferry, Chonghaejin Marine Company.

Citing results of initial investigations into the disaster, the suit said the ferry's stability had been undermined by renovations, and water ballast had been reduced to dangerous levels to make room for more cargo.

“Chonghaejin Marine Company... was neglectful in safety education and the state was very lax in the management of operation and licensing,” it said.

Although the initial claim was for 30 million won ($29 000), the plaintiff said she could raise the amount to as much as 600 million as more information emerges from the ongoing investigation and trials of the Sewol crew.

A massive manhunt is under way for fugitive businessman Yoo Byung-Eun, who heads the family behind the Chonghaejin Marine Company.

Yoo, 72, has a $500 000 reward on his head after ignoring repeated summons to submit to prosecutors for questioning on possible charges of embezzlement, tax fraud and criminal negligence.

Thousands of police spent two days fruitlessly combing the compound of a Christian sect of which Yoo was a leading member.

On Friday, police announced they had arrested Yoo's elder brother, Yoo Byung-Il, during an ID check of people near the compound.

Yonhap news agency said the 75-year-old was wanted for questioning over a separate fraud case. - AFP