Prosecutors to Speed up Investigation over Corruption Cases of State-run Firms

Prosecutors raided the headquarters of Korea Asset Management Corporation and Korea Exchange Wednesday.

As the Central Investigation Department of the Supreme Public Prosecutor`s Office

(led by Chief Public Prosecutor Park Yong-seok) announced that it would more aggressively investigate corruption cases of state-run corporations, increasingly more state-run corporations and organizations are under scrutiny.

The second tax investigation division (led by Woo Byeong-woo) of the Seoul District Prosecutors’ Office raided KAMCO headquarters in southern Seoul and the residences of the company’s employees.

Prosecutors reportedly found evidence that KAMCO manager Kim bought plain bonds of two firms from a financial institution in 2005 and recently released the bonds from attachment after taking a bribe.

Prosecutors have arrested and are investigating Kim and two other working-level employees in the bribery case.

They are trying to determine whether KAMCO executives received kickbacks from bond issuers when they bought plain bonds.

The Seoul District Court’s first tax investigation division (led by Bong Uk) raided KRX’s headquarters in Busan and its Seoul office.

It found evidence that KRX took bribes from IT equipment suppliers and is investigating related individuals.

Prosecutors dispatched around six investigators to the office of KRX Chairman Lee Jeong-hwan in Seoul and the management support team office in Busan, securing hard discs that are being thoroughly analyzed.

The KRX chairman left Korea to participate in investor relation events of listed firms on May 11 and returned to Korea on Wednesday, five days earlier than scheduled.

Kim Su-nam of the Seoul District Prosecutors’ Office said, “We believe it needs to be investigated whether Lee committed breach of trust while executing the budget and managing assets.”

The Financial Supervisory Service in its regular inspection found that KRX spent 1.05 billion won on golf as a part of its entertainment expense from January 2006 to September 2007. The FSS submitted relevant materials to prosecutors last month.

The Seoul District Prosecutors’ Office has investigated suspicions that state-run Korea Development Bank has illegally lent money to Grand Department Store. Prosecutors found evidence that KDB’s manager Choi bought shares of the department store in bulk back in 2002 and have launched an investigation into the source of the fund.

Choi bought 390,000 shares, or 7 percent of total shares of Grand Department Store, amounting to 2.8 billion won, using his relatives’ names.

Finding that Choi was in charge of the loan business in 2002 when KDB bought private placement bonds of Grand Department Store worth 180 billion won, prosecutors are trying to confirm whether Choi secured the shares in exchange for loans.

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