Public Fund of 100 Billion Won Was Illegally Loaned

The Special Investigation Headquarter For Public Fund Corruption (Chief director Kim Jong-Bin, Director of the Central Investigation) learned that Lee Jae-Kwan (photo), former vice CEO and president of the Saehan group had an illegal loan of 100 billion won by deceiving the banks organizations with a window-dressing accounting.

Mr. Lee is a grandson of the late Lee Byung-Chul, the founder of Samsung group, and a nephew of Lee Ghun-Hee, CEO and President of the Samsung group.

The Prosecution is planning to summon Han Yeong-Soo, CEO of Saehan, Co. Ltd., and Kim Sung-Jae, CEO of Saehan Media, on 12th in addition to Mr. Lee J. K. on 11th.

According to the Prosecution, Mr. Lee J. K. is suspected to make a false account as if Saehan, Co. Ltd. and other affiliates made a profit of 150 billion won in 1998 and 1999, and got 100 billion won loan from 4-5 banking institutions in 1999 and 2000 based on the false account. Mr. Lee is also suspected to paid dividends of 2 billion won illegally to the shareholders.

Saehan group is on the workout process since June 2000 and still didn`t pay back its 80 billion won loan from the banks.

The Prosecution revealed that “the most of the loan was used for the management of the company and no use for the political funds or lobbyist activities was not found.” The prosecution recently arrested four business owners, who created the demands of the public funds, including Goh Dae-Won (37), vice CEO of Saepoong, Co. Ltd.

Mr. Goh, the grandson of the late Goh Pan-Nam the founder of Saepoong group, is suspected that he illegally lent 4.53 billion won on no mortgage to Wumin Steel, an affiliate of Saepoong, in December 2996. Mr. Goh let Womin Steel pay back the debt from bank S and used his savings of about 4.5 billion won which was on mortgage for the debt of Wumin.

Meanwhile, “Saehan group announced that the incident related with Mr. Lee J. K. is nothing to do with Saehan now because incumbent managers of Saehan are all recruited after the work-out process in October 2000 and the operation of the company is becoming normal. The share of Mr. Lee J. K. is less than 1 percent.” The Prosecution is reportedly investigating on about 10 more insolvent companies.

Soo-Hyung Lee sooh@donga.com · Myoung-Gun Lee gun43@donga.com