Kim Gyeong-jun Asked the Prosecution Non-indictment

Kim Hong-il, the senior prosecutor in charge of the Kim Gyeong-jun investigation at the Seoul Central Prosecutors’ Office, announced on Wednesday, “We found no evidence that indicates GNP presidential candidate Lee Myung-bak collaborated with Kim Gyeong-jun in stock price manipulation, or that shows he is the real owner of DAS. Therefore, we have cleared him on both charges.”

Releasing the results of the investigation into Kim Gyeong-jun’s charges of rigging stock prices in Optional Ventures and embezzlement, and front-running presidential candidate Lee Myung-bak`s alleged involvement in the fraud, Prosecutor Kim explained: “It was confirmed that the investment fund BBK is owned by Kim, and the seal on the “side contract” was found to be the one that had been kept by Kim for business purposes.”

-How did you verify the content on the side contract?

“Lee should have held 100 percent of BBK shares before on February 21, 2000, when the side contract was sealed, but it has been found that Lee didn’t possess any stock at the time. As the contract said, if BBK shares were sold to LK-eBank, subsequent work should have done, such as revision of the shareholder list, stock payments, and other accounting tasks. But there was no trace of them, and Kim failed to present documents to prove them.”

-When did Kim Gyeong-jun offered not to indict him?

“A couple of days after the document verification results were released, Kim asked to meet and talked to me that he was a businessman. When I asked what he meant. He said a businessman needs “give and take,” and asked not to indict him in return for admitting to forging private documents. I refused his offer. Kim’s lawyer is fully aware of what Kim said.”

-Did Kim acknowledge BBK was his own company?

“There is a memo handwritten by Kim that reads: Kim Gyeong-jun owns a 100 percent stake in BBK even though the company has become an affiliate of LK-eBank.”

-How did you deal with the accusation made by Ji Man-won or the UNDP?

“We didn’t hear their accusation because we considered them to have misunderstood legal principles.”

-Did the money made from the sell-off of the valuable plot of land in Dogok-dong go to BBK?

“DAS purchased a swath of farming land for factory building in August 2000, and registered the land under the name of Lee Sang-eun, GNP candidate Lee’s elder brother. DAS paid for the land in the form of provisional payment, and received money equal to the value of the land from Lee Sang-eun, which was said to have come from selling the land in Dogok-dong. At the time, 11.5 billion won was deposited on ten DAS bank accounts, some of which, worth one billion won, went to BBK. So we are not sure that the sell-off money went to BBK.”

-Some 1.7 billion worth of the sell-off money went to DAS. Does it contradict the investigation result that at the time, it was claimed that a “third person” appeared to be the real owner of the land?

“What we announced today is not for confirmation that presidential candidate Lee was not the owner of DAS, but rather is to say there was no evidence that Lee owned DAS. Some of the sell-off payment, worth 792 million won, went to DAS as a paid-in capital increase payment in August 1995, and one billion won as a provisional payment in December 2000.”

-Does this mean that some 700 billion won of paid-in capital increase payment was not in the possession of Lee Sang-eun?

“What we know is how the funds flew. All we found is that among the sell-off money, 700 million won flew into DAS. There is no way to dig into the process further. In order to discover whether Lee was the real owner of DAS, we traced whether the money which flew out of DAS went to Lee, regardless of the purpose of the money. We checked the company’s accounts against their clients’, and if there was anything fishy, we traced the connected bank accounts. But we found nothing suspicious. We exhausted all means and unanimously concluded that he is not guilty of all the allegations.”

-Did three billion won out of the total investment funds in DAS come from candidate Lee?

“Kim Gyeong-jun asserted that Lee owned 100 percent of LK-eBank. Though the three billion won was invested under Kim’s name, he insisted that the three billion won was under the borrowed name and the money was Lee’s. When being reported to the Financial Supervisory Service for fabricating documents, BBK was forced to repay the fund. The authorities’ investigation, tracing sources of the refund, found that Kim asked his lawyer to wire his own money for repayment. If the three billion won had been Lee’s, he wouldn’t have wired the money.”

-Has Lee never exerted his influence on raising funds for BBK?

“DAS invested in BBK because DAS had capital surplus. While deciding where to invest, he heard that BBK would return more than 30 percent of the investment annually, and decided to invest. It was a natural way to invest.”

-Regarding the real owner of DAS, the announcement said, “We have found no evidence that Lee owned DAS.” Are you sure that an independent counsel will reach the same conclusion?

“We couldn’t have issued the investigation results if we weren’t confident in them.”

-Why did Hana Bank invest in BBK?

“The investment was made by put option and Lee was an underwriter. It was virtually impossible for somebody to give a hint to Hana Bank to invest in BBK.”

-We heard that Kim Baek-jun was aware of the change in BBK’s articles of incorporation.

“Kim Baek-jun said that he had known the fact that the articles of incorporation were submitted, but not the changes. Both Lee and Kim Baek-jun had no interest in stock management and Kim Gyeong-jun managed the accounts.”

dnsp@donga.com