KTF CEO Arrested on Bribery Charges

The head of KTF, the mobile phone subsidiary of the country’s telecom giant KT, was arrested yesterday on charges of bribery and breach of trust.

Cho Young-ju is alleged to have taken bribes in return for business favors involving KTF, the country’s second-largest wireless service operator.

Prosecutors said they traced cash and checks worth 2.5 billion won Cho received from Jun Yong-gon, the de facto owner of BCNe Global which supplies mobile phone repeaters to KTF. Jun was also arrested.

BCNe Global is confirmed to have paid Cho as bribes three to five percent of the value of what it supplied to KTF between April 2006 and June this year.

Earlier, prosecutors secured a memo with a detailed list of how much the supplier paid seven to eight KTF employees including Cho in bribes, including the dates and account numbers, when it searched Jun’s office.

Investigators said Cho received the bribes through borrowed bank accounts prepared by BCNe Global or those set up under the names of his two brothers-in-law. He reportedly received the rebates in cash at times.

Specifically, BCNe Global made 40 payments of less than 20 million won each when it bribed Cho. The amount of each payment and withdrawal recorded in Cho’s borrowed-name accounts ranged from 15 million to 19 million won.

Cho and Jun seemed to have made sure each payment and withdrawal were under 20 million won to avoid the Korea Financial Intelligence Unit, which notifies financial supervisors or authorities of frequent transactions of more than 20 million won each.

Cho’s wife frequently withdrew money from his accounts and kept it at home to use whenever needed. Investigators said she might know where the money was spent instead of having just served as a middleman who withdrew the money for Cho.

She is also known to be in poor health after her husband was arrested.

Cho might also have offered bribes to top KT and political figures formerly with the now-defunct Information and Communications Ministry for resolving complaints involving KTF, including a reduction in mobile phone fees.

Prosecutors acquired testimony that an acquaintance of former senior presidential secretary for civic and social affairs Lee Kang-chul, a close aide to former President Roh Moo-hyun, became a board member at BCNe Global at Lee’s request.

The probe is searching for evidence indicating other bribery charges.

Apart from Lee, the list of possible suspects in the KTF lobbying scandal includes four politicians who have had direct and indirect relations with former and current top management of KT and KTF.

Furthermore, Cho’s bribes might have flowed into the campaigns of presidential primary candidates since most of the transactions were made between November 2006 and April last year, about a year ahead of the presidential election in December last year.

Cho has reportedly denied the charges against him, saying, “I know nothing about the money in my brothers-in-law’s accounts and I borrowed the cash in question from Jun to help my relatives with economic difficulties.”

A prosecutor said, “We will also look into lobbying allegations of politicians if we find any evidence.”

needjung@donga.com