Korea Teachers’ Credit Union Purchased a Large Number of Shares in 2005

It was confirmed on March 6 that Vice Minister of Education and former Chairman of Korea Teachers’ Credit Union (KTCU) Lee Gi-woo, who played golf with Prime Minister Lee Hae-chan on Independence Movement Day (March 1), purchased a large number of shares of Y Flour Mill Company, the property of entrepreneur Y, who also played golf with them that day.

It has also been disclosed that Y’s 33-year-old eldest son donated four million won to Prime Minister Lee right before the April 15 general elections in 2004.

KTCU started to buy Y Company’s shares on KOSDAQ in May 2005, purchased 1.2 million shares at 4,441 won per share on August 9, and between September 13 and September 30, it bought an additional 363,000 shares at around 4,000 won per share.

Afterwards, Y Company’s stock prices gradually increased, and on October 26, it peaked at 6,410 won per share. Between October 7 and October 28, KTCU bought an additional 323,000 shares and sold 232,000 shares on November 30.

KTCU stated on March 6, “Until now, we have bought Y Company’s shares 20 times and sold six times, netting one billion won in profit. Currently we hold 1,654,000 shares (7.96 percent of the total number of shares) worth about 6.4 billion won.”

Vice Minister Lee was the chairman of KTCU from March 2003 to July 2004, and his successor is Kim Pyong-soo, the Ministry of Education’s School Support division chief when Vice Minister Lee was the Planning Management division chief. Chairman Kim was Gyeonggi Province’s Office of Education vice superintendent when Prime Minister Lee was minister of education from March 1998 until May 1999.

Hence, with such background, there is growing attention on whether KTCU’s buying of a large number of Y Company’s shares has something to do with Vice Minister Lee’s relationship with Mr. Y.

In response KTCU stated, “After working-level officials elected 20 promising small and mid-sized companies and underwent investment analysis, Y Company, with a good dividend rate, and 12 others were selected to be invested.”

Y was arrested on September 2001 for manipulating Y Company’s stocks, which resulted in losses exceeding tens of billions of won, and was sentenced to one and a half years in jail and fined four billion won. He was released in 2003 after serving his sentence.

According to Prime Minister Lee’s list of large donors reported to the National Elections Commission, Y’s eldest son donated four million won on April 6, 2004, to Prime Minister Lee’s political support organization.

On the donor list, his occupation field is left blank, and his address is listed as a villa in Cheongdam-dong, Gangnam-gu, Seoul, raising suspicion that Y donated the funds in his son’s name.

According to Cheong Wa Dae’s Vice Spokesperson Choi In-ho, Prime Minister Lee met with President Roh Moo-hyun, on the morning of March 6, right before the president’s tour of three African states and told him “Sorry for causing trouble. I will take good care of national affairs while you’re absent.”

In response, President Roh said nothing particular but asked, “Take good care so that there are no setbacks in national affairs while I’m on tour.”

Myoung-Gun Lee Kang-Myoung Chang gun43@donga.com tesomiom@donga.com