Gana Chairman Linked to Embezzlement

On October 16, it has turned out that the prosecution did not investigate the allegations of Gana Publishing embezzlement and tax evasion of around 20 billion won. Chairman Kim Nam-jeon (44) of Gana Publishing is the brother of Kim Nam-kyung, who bought Jangsucheon, a bottled water company, from President Roh. Gana Publishing’s best seller is “Cartoon Greek and Roman Mythology.”

The prosecution’s investigation report exclusively obtained by Dong-A Ilbo revealed that Kim misappropriated 21.2 billion won to bank accounts under a borrowed name, including 3.5 billion won in cash, five billion won in bank checks, and 12.7 billion won in transfers between fake accounts.

After the prosecution tracked his account for three months and found he pocketed corporate funds, it summoned Kim to question the whereabouts of money. Yet Kim argued “I used the money for transaction purposes only, not for personal purposes.”

Kim stated that he would “submit the evidence to prove the purpose of the money,” but he did not present any receipts. He even said that “There is no document to prove” for what 3.5 billion that was withdrawn from the bogus account was spent.”

The prosecution made suspect query reports and closed the internal investigation in February without further investigating or tracking where the embezzled money had gone.

“When I have high financial interest income, I have to pay large amount of tax, so I divided the fund into borrowed accounts and used cash to reduce sales,” said Kim, admitting guilty of tax evasion. Yet the prosecution never informed the National Tax Service.

The prosecution punished those who are involved in Hyundai and Doosan scandals for bribery, violation of political fund law and misappropriation after tracing the borrowed accounts.

Gana Publishing and Jangsucheon-

Jangsucheon was on the verge of bankruptcy when President Roh owned it, and was sold to Sin for 227 million won in May 2001. In October 2002, Kim Nam-kyung, brother of the chairman of Gana Publishing, bought the company for 1.1 billion won.

While the ownership changed twice, the representative director of the company was Seon Bong-sul. At the time of the bid, Mr. Sin who worked as deputy commissioner of the Millennium Democratic Party Dong-gu chapter, Daejeon, was later nominated as director of Dong-gu government office. He then went over to the Uri Party in October 2003. Kim Nam-kyung was from Seongju, North Gyeongsang Province, and served as the head of Democratic Nationalist Party’s Seongju chapter.

Why did the prosecution investigate?-

The investigation started when royalties from the cartoon book published in November 2000 were in dispute and the author filed suit against Chairman Kim in July 2004 on charges of fraud. The author argued that the publisher hid tens of billions of won in revenues by sharply reducing sales and pocketed book royalties, which was supposed to go to the author.

A press outlet raised doubts about the slush fund of Gana Publishing and the process of Jangsucheon’s takeover in November 2004. Kim Nam-kyung sued the press for libel.

In the process of investigation on libel, the prosecution noticed the embezzlement but closed the case when Kim dropped the case that he had raised.

“I replied properly in the prosecution interrogation on most issues including 3.5 billion won in cash and everything is clear. I have nothing to say any more,” said Kim.

“We investigated for a long time with a task force designed to trace the funds in fake accounts. We found no reliable evidence of embezzlement, even though we did not figure out where all the money in the accounts of the borrowed name was spent,” said a prosecutor who initiated the investigation.

woogija@donga.com leon@donga.com