Increasing Suspicion on KNR’s Investment in Oil Development

It has been revealed that Huh Mun-seok (71, doctor of geology), president of Korea Crude Oil (KCO)—a joint-venture company for the Russia oil field development project, which was organized by Korea National Railroad (KNR), the predecessor of Korea Railroad—took advantage of his strong connection with high-ranking officials and lawmakers.

Moreover, the person who introduced Jeon Dae-wol, 43, president of a real estate firm and whose departure was prohibited by the Board of Audit and Inspection of Korea, to Huh was confirmed to be a politician, which fuels suspicion of the deep involvement of political figures in this incident.

Last August, the Korea Rail Traffic Development Foundation, an organization under the influence of the Korea National Railroad, in cooperation with private enterprisers, established the KCO for which Huh served as director. And, one month later, he was appointed as the president of the company.

According to a person who went to the same high school as Huh, Huh accumulated a fortune while working for oil companies in the U.S. and Indonesia, and maintained a strong connection with political figures.

Huh’s best friend in politics is Lee Ki-myung, former chairman of support groups of President Roh Moo-hyun and Lee Kwang-jae, the lawmaker of the ruling Uri Party.

Huh went to the same high school as Lee Ki-myung, and Lee introduced Rep. Lee to Huh in 2001. A related report stated, “In 2001, Huh, who was a supporter of President Roh Moo-hyun, a candidate of presidential election at that time, met Rep. Lee at Keumgang building, Yeouido, Seoul, through the introduction of Lee.”

Rep. Lee went to the same middle school as Jeon and also is from the same hometown.

In 2002, Huh served as an advisor with the title of economic advisor for Indonesia to the president at an institute for self-government, which was one of the organizations that supported President Roh Moo-hyun during his campaign. Rep. Lee also served as planning chief in this institute.

“Huh and Lee are very close friends,” said A, who went to the same high school as Huh. A source from the Institute for Peace Affairs, in which Huh served as director, said, “Huh met Lee whenever he came back to Korea.”

One private enterpriser who was involved in the KCO said that Huh was more enthusiastic about the Russia oil development project than anyone else.

During a conversation with a reporter of the Dong-a Ilbo yesterday, Jeon said, “When I asked Rep. Lee for help in regard to the oil development project last June, Rep. Lee introduced Huh and, since then, Huh has led this project.”

He also said, “I first met Rep. Lee at an alumni athletic association held in Pyeongchang-gun, Gangwon-do in April 2004, and in October, we had a brief greeting at a meeting of Gangwon-do citizens,” adding, “We are not as close as others might assume.”

Gwon Gwang-jin, 52, president of Cook Energy, an energy trading company, which suggested the project to Jeon, said, “Because of Huh’s investment proposal that stresses the profitability of this project, the Korea National Railroad became involved.”

“Aside from the Sakhalin oil development project, Huh was also involved in an Indonesia iron ore development project and an aggregate collecting project in North Korea,” said B, who went to the same high school as Huh.

“When we examined the propriety of the Russia oil development project last October, Huh visited a Korea National Railroad office in Jung-gu and said that the project was very profitable. Thus, we decided to continue with this project,” said a source from Korea National Railroad.

Huh’s high school alumni said that Huh, who was born in Gimhae, Gyeongnam, went to the U.S. after finishing the first year of Yonsei University, and became a professor after obtaining a Ph.D. in geology from the University of Michigan.

Huh worked for an oil company, Texaco, which is connected to former U.S. President George Bush, (farther of current President George W. Bush), and served as vice president of an Indonesia oil company, in which he was involved in a Madura oil development project.

After this, Huh established companies related to oil and iron ore in Indonesia. This was delivered by his alumni.

Huh Kyung-man, former governor of Jeonnam province, said, “I visited Indonesia to meet the president in 2001, when Huh solved some problems that were not even handled by the Korean embassy there.”

A source from the Institute for Peace Affairs and A, who went to the same high school, said, “North Korea offered Huh to replace Yang Bin, who stepped down from his position as chief executive of Sinuiju City after being arrested by Chinese authorities.”

In sum, Huh, who has a decent background in oil development, pushed the Korea National Railroad to participate in the project, for which some are suspicious that Huh might have taken advantage of his connection with political figures.

Despite continuous attempts, Dong-a Ilbo failed to contact Huh. Instead, Huh’s wife said, “Most of his working career is true. But, he left China last Saturday for business.”

Lee Ki-myung also sternly refused to comment.

Se-Jin Jung needjung@donga.com mint4a@donga.com