Resumption of Investigation on Daesang Group

The prosecution resumed investigation on Daesang Group’s slush fund scandal and searched its head office yesterday.

The Incheon District Public Prosecutors’ Office said that the searching through the head office of Daesang Group was spurred by the testimony of Daesang’s honorary chairman Im Chang-uk, 56, to the Seoul High Court, in which he admitted spending 7.2 billion won in slush funds for personal purpose. The office said that, after examining the related materials at that time, it felt the resumption of investigation was indispensable.

In 2002, the prosecutors’ office conducted an investigation on Chairman Im, who was suspected of raising 7.22 billion won in slush funds by exaggerating the disposal cost of waste remaining after construction of an apartment built from November 1998 to July 1999 at the site of the group’s factory located in Seoul.

The prosecution indicted Yu, president of a waste disposal company and who had worked as an executive in Daesang Group, for illegally channeling a large amount of company money by fabricating account books and contracts. Yu purchased the waste disposal company as an affiliate for this purpose and exaggerated the amount of waste. Park, who was in charge of financial management of Chairman Im, was also indicted for investigation at that time.

However, the disappearance of crucial witness caused the prosecution to drop the case because there was no way to prove that Chairman Im spent the funds for personal purpose without his testimony.

A source from the prosecution said, “Whether or not to summon Chairman Im depends on what we will find through the investigation,” adding, “If necessary, we can summon those who were questioned in the previous investigation again.”

In this January, Seoul High Court handed down a prison sentence to three former executives of Daesang Group for illegally channeling company money by building up a false affiliate.

Meanwhile, a high-ranking official of Supreme Public Prosecutor’s Office said, “After seeing what has been found by the current investigation, we will launch an inspection to an investigation team that was in charge of investigation in 2002.”

Jun-Ho Cha run-juno@donga.com