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Multiple Industries Named in Oil Scam

Posted February. 09, 2006 04:30,   


A Chungnam Provincial Agency (CNPA) investigation team reported yesterday that an oil wholesale company in Seocheon County, Chungnam conspired with former and current executives from the National Federation of Fisheries Cooperatives (NFFC) in Seocheon and illegally sold five billion won worth of tax-exempt oil (about 35,000 drums).

Tax-exempt oil is designated by the government for the use of farmers and fishermen. Its price is one-half to one third that of non-tax-exempt oil.

Gas Stations Searched-

Police searched 25 gas stations of the offending company and the Seocheon NFFC on January 9 and 13. They confirmed from testimony from gas station owners that the oil company supplied them with tax-exempt oil to be sold illegally as non-tax-exempt oil. Police also decided to issue summonses against fishermen who sold gas stations duty-free oil slips.

Investigators said an executive from the company in question conspired with an executive from the Seocheon NFFC to obtain tax-exempt oil slips after paying kickbacks to fishermen from January 2003 to May 2005.

The police believe they acquired the tax-exempt oil from refining companies and sold it to regular gas stations.

“We will summon the company in question and the executives from the Seocheon NFFC as we confirm that fishermen sold the tax-exempt oil slips,” police said. “We are planning to investigate whether oil refining companies were involved in this case.”

The police received sales documents recording the illegal oil distribution process from “K,” who was in charge of ordering at the oil wholesale company.

In addition, police found a list of names of fishermen who sold slips during searches of two executives’ homes. “K,” who informed authorities of the illegal dealings, said, “While I was distressed after learning about the company’s illegal dealings, I was very angry at being treated inhumanly. So, I reported it to the police.”

Illegal Oil Sales On the Rise-

According to the Korean Coast Guard, cases of illegal sales of tax-exempt oil surged to 3,117 in 2004 alone, compared to 29 in 2000, 25 in 2001, 35 in 2002, and 475 in 2003.

“There are many cases of fishermen who use small vessels and illegally distribute oil,” said a former official in charge of managing tax-exempt oil at the NFFC.

He added that even though a fishing embankment is not being built and fishing spots have not formed, the window for issuing delivery orders at the NFCC was packed with people.

Fishermen, tax-exempt oil station owners, transport companies, general gas station owners, and NFCC managers are all systemically involved and distributed profits,” he said.

“Fishermen are highly dependent on tax-exempt oil because fuel costs are a large part of their total fishing expenses, followed by labor costs. Transport companies and tank facilities for tax-exempt oil should be supervised.”

Myung-Hun Jee mhjee@donga.com