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Prosecutors Summon Prime Group Chairman

Posted October. 14, 2008 06:46,   


Prosecutors yesterday summoned Prime Group Chairman Baek Jong-heon, 56, who is alleged to have created slush funds.

“Baek is suspected of having embezzled tens of billions of won (hundreds of millions of U.S. dollars) through illegal transactions between subsidiaries and inflating revenues since 2002,” a prosecutor said.

He is also suspected of ordering a subsidiary to lend 18.3 billion won (14.8 million dollars) without collateral to the president of another subsidiary last year.

Prosecutors said Baek damaged the subsidiary that lent the money by using leveraged buyout when his group took over Dong Ah Construction last year.

After tracking bank accounts, he was found to have spent part of the money for personal use and gave a sum to his relatives.

“We found he used part of the embezzled money to pay for the education costs of his children studying abroad, taxes and foreign artworks,” said a prosecutor. “We are now keeping an accurate track of the flow of money.”

Prosecutors will apply for an arrest warrant for Baek today.

The probe will also cover the suspicion that the group lobbied politicians.

Prosecutors are also looking for a financial executive director of a company “Yang” who is known to have managed Baek’s money.

“Yang seems to have delivered funds to Baek created illegally through subsidiaries,” said a prosecutor. “Since Yang disappeared after the initial investigation, we are now trying to find him with an arrest warrant.”