Embarkation Ban on Ten Wealth-Smugglers

The Prosecutor`s Office has set out an investigation of the large stockholders of 8 insolvent firms, including firms identified as J and M, on which public funds had been expanded, suspected of having smuggled abroad their properties worth 400 million USD (nearly 500 trillion won).

The Supreme Public Prosecutor`s Office Central Investigation Department (Chief, Yoo Chang-Jong) announced on Nov. 23, "As the Board of Audit and Inspection of Korea requested early in November an investigation of large stockholders of 8 firms under suspicions of having smuggled their money aboard, we assigned the cases to the provincial police agencies in charge of the areas where the firms were located, and banned the embarkation of over 10 former-current large stockholders and staffs of the insolvent firms."

▽ The Prosecution`s Investigation==The Seoul District Prosecutor`s South Branch Office is investigating a former big stockholder of a company known as K, a person identified as M, who is suspected of having smuggled aboard his wealth worth 100 trillion won, and the Chungju District Prosecutor`s Office is investigating a former big stockholder of a company known as K, a person identified as Y, who is under suspicion of having smuggled 90 trillion won.

The Prosecutor`s Office said that among many cases of wealth-smuggling on which investigations had been requested 4 cases were assigned to the Seoul District Prosecutor`s Office and 1 to Jeju Office.

A source at the prosecution said, "Besides the cases whose investigations were requested by the Board of Audit and Inspection, District Prosecutor`s Offices and branch offices are undertaking investigations into suspicions of embezzlement or smuggling of money conducted by staffs of the firms supported by financial institutions to which public funds were committed."

▽ The Board of Audit and Inspection`s Special Inspection==The Board of Audit and Inspection of Korea (BAIK) exposed over 200 irregularities as a result of special inspection upon 5 public fund management institutions, including Financial Supervisory Committee, Financial Supervisory Service, Korea Deposit Insurance Corporation and Korea Asset Management Corporation, and 98 financial institutions to which public funds have been committed, and reported them to inspection committees on Nov. 23.

BAIK supposedly found that in additions to the insolvent firms into which BAIK requested investigations from the Prosecutor`s Office, the former big stockholders and staffs of the insolvent firms on which public funds had been expanded had concealed properties estimated at 4 trillion won by registering them under false names.

BAIK is planning to determine on the results of special inspections by Nov. 27 and to report to the National Assembly Public Funds Special Committee. The Grand National Party is planning to set out a parliamentary investigation (a hearing) into the whole public fund management on the basis of BAIK`s report.

As a result of BAIK`s special inspection, over 10 people, including former big stockholders of company known as K, were found to have misappropriated huge amounts of funds.

Besides, Nara Investment Bank and Daehan Investment Bank were found to have fabricated the ratio of the firm`s net worth in order to meet the Bank for International Settlements (BIS) standard imposed by the government by submitting false financial documents of quarterly accounts at the `withdraw` examination conducted twice in January and July of 1998 by the government, and thus their staffs and the accountant firms involved in the quarterly accounts are to face reprehensive measures. In addition, the administrators of bankrupted property who had been appointed to manage the residue of bankrupted financial institutions were found to have used the corporative golf club memberships worth 1 billion won for entertaining themselves and others even during the weekdays, rather than disposing them according to their duties of setting the maximum residues as early as possible and of liquidating the bankrupted assets.

Chol-Hi Lee klimt@donga.com