26 Indicted for Private Usage of Public Funds

The Special Investigative Office on corruptive usage of public funds under the Korean Supreme Public Prosecutor’s Office, led by Ahn Dae-hee, announced on May 28 the indictment of nine suspected people, including Kim Suhng-pil, the former president of Sungwon Construction Group, Kim Tae-hyung, the former president of Hanshin Construction, Lee Joon-ho, the former representative of Choongnam Spinning, and others on charges of getting a huge amount of fraudulent loans and secretly hoarding company money.

The prosecution indicted 17 others including Chun Yoon-soo, the president of Sungwon Group and representative Won Ha-yeon of Century, an air cooler and heater maker, without physical detention under the charges of illicit funding and amassment of slush funds.

In addition, the prosecution indicted former president Choi Won-seok of Donga Group, who is under custody for charges of malpractice and window-dressing, for additional charges of amassing 18.4 billion won in slush funds and receiving fraudulent funding of 600 billion won through window-dressing for a total of 1.2 trillion won.

The prosecution made its report after investigating six corporations that received public funds including Sungwon Construction Group, Donga Group, Sungwon Group, Hanshin Construction, Choongnam Spinning and Century, that a total of 1.39 trillion won was proved to be fraudulent loans, and financial institutions were burdened with bad debts worth 5.8495 trillion won from the above mentioned bankrupt companies.

The prosecution gave a refund notification to repay the Korea Deposit Insurance Corporation as a hidden estate worth 93.1 billion won, including 63.4 billion won hidden by Sungwon Construction were discovered in the investigation process. The total of payable or repaid public funds that was found after the launch of the Special Investigation Office back in December of 2001 increased to 170.1 billion won after this investigation.

According to the prosecution, former president Kim of Sungwon Construction is suspected of embezzling 20.7 billion and receiving fraudulent loans of 420 billion won under the name of the company’s affiliate after acquiring Hangil Capital in March of 1997.

Former president Choi of Donga Group was charged with malpractice for having the company buy 1.7 billion won worth of his private real estate for 2.4 billion and pay the compensation of 2.4 billion for his ex-wife besides his former charges of account fraud and embezzlement.

Jin-Young Hwang buddy@donga.com