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`Roh’s Brother Bought Shares Under False Names`

Posted December. 04, 2008 07:45,   


The Supreme Public Prosecutors’ Office yesterday said the elder brother of former President Roh Moo-hyun bought 780,000 shares of RealID Technology (formerly Pass 21) under false names.

Taekwang Industrial is the largest shareholder of RealID, and prosecutors are investigating how and why Roh Gun-pyeong acquired the shares.

Investigators probed how Roh Gun-peyong, the real owner of Jeongwon Construction, used construction expenses of 3.26 billion won (2.2 million U.S. dollars) he received from Jeongsan Country Club to set up the access road for Jeongsan Golf Course in Dec. 2003. He is known to have spent around a billion won (686,270 dollars) to buy RealID stocks.

Taekwang Industry CEO Park Yeon-cha, the former president’s long-time political sponsor, invested 7.6 billion won (5.2 million dollars) into RealID via a capital increase with consideration allotted to a third party in March 2004. Roh Gun-pyeong also invested in the company under the names of two friends.

Prosecutors will investigate whether Roh Gun-pyeong invested in RealID after obtaining inside information from Park. They will also seek if Roh used capital from Jeongwon Construction.

They will also charge Roh with violating the Securities Exchange Act if they find out evidence that he failed to disclose that he secured the stocks even when he owned them under false names.

RealID was founded as Pass 21 as a developer of fingerprint recognition technologies. After Pass 21 owner Yun Tae-sik was arrested on murder charges in 2001, management was transferred to a third party and the company was renamed RealID.

Taekwang executives including Park secured RealID’s management by participating in the capital increase with consideration of RealID in March 2004. Jeong Seung-yeong, former president of Huchems and a close associate of Park, worked for RealID as a representative director from March to October this year.

Prosecutors are investigating why Taekwang hired RealID to establish a security system worth three billion won (two million dollars) in May 2004, and why Taekwang participated in RealID’s capital increase along with commercial banks.

Park is also alleged to have given two billion won (1.4 million dollars) to the former chairman of the National Agricultural Cooperative Federation as a part of lobbying to acquire Huchems.

Prosecutor Choi Jae-gyeong said, “It could’ve been a normal transaction. At the same time, however, it is also possible that the money was spent on lobbying. Another possibility is that they divided revenue they earned via the use of inside information.”

Another probe has been extended on how former Nonghyup Chairman Jeong spent five billion won (3.4 million dollars) he received after Sejong Capital sold Sejong Securities.

Choi said another person might have been involved in lobbying on the sale of Sejong Securities, saying, “Part of the five billion won seems to be delivered to someone else.”

Prosecutors had said that Jeong controlled the money.

The Seoul Central District Court will hold a hearing on issuing an arrest warrant for Roh Gun-pyeong this morning.

needjung@donga.com toto@donga.com