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Prosecution Begins FTC Investigation

Posted December. 20, 2006 03:02,   


The Sixth Criminal Department of the Seoul Eastern District Public Prosecutors’ Office, headed by superintendent prosecutor Kim Jin-mo, launched a full investigation into the Fair Trade Commission (FTC) after the Seoul YMCA filed a request for investigation of the commission on Tuesday declaring that there are “suspicions of collusions between the network marketing company JU Group and the FTC.”

The Seoul YMCA issued a statement denouncing the JU Group scandal as “a fraud case which the Fair Trade Commission made possible through its systemic support and complicity, and in which it amplified the losses by dereliction of duty and inattentive administration,” and declared it was “requesting public prosecutors to investigate the FTC and the officials in charge for abuse of power, dereliction of duty and collusion with the JU Group.”

The Public Prosecutors’ Office plans to probe the factors behind the FTC’s removal of the penalty clause on excessive sponsorship payments as well as its easing of price regulations in the 2002 amendment of the Act on door-to-door sales.

The prosecution also came to the conclusion that former Cheong Wa Dae secretary Lee Jae-soon and five of his family members received illicit bonuses from JU, but appears to have decided not to bring them to court as their criminal charges were not confirmed.

“It is true that former secretary Lee’s family members received higher payments than the average sales agent,” said an official at the Public Prosecutors’ Office. “But it is difficult to decide whether charges can be pressed against them since they do not seem to have pressurized JU Group to give them the extra money.”

The prosecution is also looking into the possibility of bringing another legal action, malfeasance in office, against the already detained JU Chairman Joo Soo-do for paying unlawful bonuses to Lee’s family members. The payments were in the hundred million won range and given out against company regulations after business was suspended last December.

The office will carry out supplementary investigations on JU Group’s illegal lobbying of politicians and announce the results as early as December 21.

achim@donga.com will71@donga.com