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5.4 Billion Won Surety Might Be Illegal

Posted August. 30, 2007 07:59,   


The owner of a Busan-based construction company, a Mr. Kim (42), served prison time for giving 100 million won in bribe money to the commissioner of the National Tax Service Jeong Sang-gon, whom he was introduced to by former Cheong Wa Dae protocol secretary Jeong Yun-jae. Recently, an allegation has emerged that Kim received favorable treatment from a government-led fund that stood surety, which he needed to receive large amounts of loans from financial institutions.

On July 17, Kim was booked on charges of forging financial documents and submitting them to two state-run funds, the Kibo Technology Fund and the Korea Credit Guarantee Fund, in order to get loans of some 6 billion won from commercial banks. He used the money for personal purposes.

According to prosecutors, in April 2003 Kim forged documents such as construction contracts of “J” Construction and “H” Civil Engineering that belong to him. By submitting those documents to the Busan branches of the Kibo Technology Fund and the Korea Credit Guarantee Fund, he received 4.12 billion won and 1.293 billion won in surety from the two funds, respectively.

With the surety, he illegally received 6 billion won in loans from commercial banks and used the money for personal purposes before closing down the two businesses. He is charged with incurring huge amount of losses to the two funds.

Regarding this, one Korea Credit Guarantee Fund official said, “Companies with annual revenues of 5 to 6 billion won can get security. Back then, I remember, “H” Civil Engineering’s yearly revenue was about 20 billion won.”

However, an from another Busan-based construction company rebutted, “I can’t believe “H” Civil Engineering had revenue of 20 billion won. I think there was something fishy about the process.”

Kim paid back some of money he borrowed in June when the prosecutors started their investigation, and paid the rest on July 26, a day before a review of legality for confinement. He finally was freed on July 27.

Back then, a court of law released him on a bail of 30 million won, saying, “Kim paid off the amount he borrowed almost in full and the victims want Kim to continue to run his companies.”

However, prosecutors said in the arrest warrant, “Kim is charged with forging land purchase contracts for apartment re-development projects in Yeonsan-dong, Busan, and embezzled 3.8 billion won. The case is very serious and the amounts involved are huge. He should be detained.”

Regarding the need for an investigation into protocol secretary Jeong, the Busan District Prosecutors’ Office said, “We do not plan to look into Jeong as Kim has already served and there is no sign that Jeong received bribes.”

An official from the Supreme Prosecutors’ Office hinted that they have no intention to expand the investigation any further by saying, “The case should be dealt with by the Busan District Prosecutors’ Office. A court procedure is now under way. So the investigation is over.”