Next Week, Subpoena for President Choi Tae-won of SK

On 18th February, the Crime Division-9 of the Seoul District Public Prosecutors’ Office (Head District Prosecutor, Lee In-gyu) has hasten their investigation, when they acquired witnesses and circumstantial evidence of illegal donation of stocks and insider trading between SK Securities and JP Morgan

The Prosecutors’ Office will soon conclude their investigation on executives and finance administrators of SK ‘Jaebal’ Group and their subsidiaries. Next week, prosecutors plan to put out a subpoena on President Choi of SK Securities Corporation and prosecute him if he is found guilty of crime.

“There are witness statements admitting President Choi’s illegal orders. After investigation of other sixteen suspects in the corporation, Choi will be summoned for investigation. All seventeen suspects are forbidden from leaving the country,” said an official of the Prosecutors’ Office today.

The Prosecutors’ Office has announced that among the suspects list, Choi Chang-won, Vice President of SK Global Corporation and a cousin of President Choi is included.

According to the Prosecutors, Choi is a suspect of insider trading which involves selling of Walker Hill Hotel’s stock (40.7%) to SK subsidiaries namely SK C&C and SK Global corporations above their market price of 40,495 won per share. He has acquired 5.2% of SK corporation stocks in return.

Choi is under suspect by the Prosecutors of committing illegal insider trading among the SK subsidiaries in order to safeguard his management position in the corporation before ‘Debt-equity Limit Act’ in April 2002. His management position might have shaken when ‘Debt-equity Limit Act’ in April which forbids debt-equity ratio of more than 25% of the company’s net assets by the management.

The Prosecutors’ Office explains that expensive selling of the non-registered Walker Hill Hotel stocks which can’t be cashed, in return for SK corporations’ easily cashable registered stocks is a illegal trading which takes advantage of non-registered stocks’ evaluation.

Meanwhile President Choi is also under investigation for amoral double trading between SK Securities and JP Morgan in December 1999. One of SK subsidiary, the SK Global foreign branch has purchased SK Securities stocks owned by JP Morgan above market prices, which led to a financial loss of 1,000 billion won for SK.

On 18th, in regards to these investigations, the Prosecutors’ Office has summoned two finance administrators from SK C&C and four executives from SK Group’s Restructuring Coordination Headquarter for investigations. The investigation was focus on President Choi’s illegal orders and his participation and knowledge in the Walker Hill Hotel deal.

The Prosecutors concentrated especially on Choi’s direct participation by summoning operation managers in charge of Choi’s personal account in the SK Securities Corporation.

Sang-Rok Lee Tae-Hoon Lee myzodan@donga.com jefflee@donga.com