March 1 Golf Scandal Investigation Launched

Prime Minister Lee Hae-chan has been under fire since it was known that he played golf on the first day of March when he was supposed to work instead of being on the green. Prosecutors launched an investigation on March 10 into the prime minister’s “March 1 golf scandal.”

On March 10, the opposition Grand National Party (GNP) took a legal step against Lee and Vice Education Minister Lee Ki-woo, one of the prime minister’s close associates. According to the GNP’s allegations, the two senior officials received bribes while gambling during golf games. In response to the accusation, the Seoul Central District Prosecutors’ Office (DPO) will head an investigation into the scandal.

The prosecution is reviewing ways to concentrate its investigative attention on probing into the connection between the GNP’s accusation and the suspicion that Youngnam Flour Mills Company manipulated its stock price and engaged in price-fixing.

“Chief and assistant prosecutors will have a meeting next week to decide whether to probe into both the GNP’s allegations and the flour price-fixing case reported to the Fair Trade Commission,” an official in the Seoul Central DPO said.

According to sources, the prosecutors have anticipated that the Financial Supervisory Service will begin its own investigation into the allegation of stock price manipulation by Youngnam and then file a lawsuit against the company. In preparation, investigators have collected relevant materials on purchases of Youngnam shares by the Korea Teachers’ Credit Union (KTCU) and Youngnam’s sale of its own stocks, and have been going over them.

Prosecutors are likely to find out whether Youngnam manipulated its stock price and what role the KTCU and Vice Education Minister Lee played in the manipulation.

In addition, the Seoul Central DPO is ready to investigate the suspicion that eight milling companies, including Youngnam, consulted with one another to fix the price of flour when the Fair Trade Commission files a suit against the milling company.

When he visited the Daegu High Prosecutors’ Office and district prosecutors’ office (located in the province where Youngnam Flour is headquartered) on March 10, Prosecutor General Jeong Sang-myeong held a press conference and told reporters, “We are following the Youngnam’s stock price manipulation case and its involvement in the March 1 golf scandal very closely.”

The GNP’s legal action against the prime minister and the vice minister on charges of bribery came before the prosecutor general’s visit to Daegu.

The GNP claims that Prime Minister Lee and Vice Education Minister Lee gambled during golf games with businessmen from Busan on March 1, and that the Busan businessmen paid one million won for the golf games and a meal. The GNP also claims that the vice minister was deeply involved in the operations of the KTCU (which mass-purchased Youngnam shares) along with the prime minister, and that their involvement points to the possibility of bribe taking.

It was also revealed that one of the Busan businessmen had caused a stir because of his illegal financial contributions to politicians.

In a telephone interview with a Dong-A Ilbo reporter, Jeong Soon-taek, a former presidential secretary for education and culture and one of those who played golf on March 1, said, “Kang Byung-joong, Nexen Tire president, paid 400,000 won for the golf outing.”

Jung-Eun Lee woogija@donga.com lightee@donga.com