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Probe Finds Embezzlement by Korea Express Execs

Posted September. 24, 2009 08:33,   


Prosecutors have obtained evidence that executives at Korea Express embezzled company funds, according to news reports yesterday.

The financial transactions of Korea Express staff and contractors were traced based on the allegation that the company gave part of the bribes given to Kang Moo-hyun, who served as maritime affairs and fisheries minister under the Roh Moo-hyun administration, by Dongyang Express Ferry.

Kang was indicted for graft in July last year.

Korea Express, which operates port terminals, is known to have raised illegal funds to bribe shipping companies.

Prosecutors seized Tuesday 40 boxes of accounting documents from company branch offices in Busan and Masan, South Gyeongsang Province. Certain employees and executives of the company were banned from leaving the country yesterday.

Separately, prosecutors in Incheon are investigating Doosan Infracore for procurement fraud, saying it earned illegal funds worth 800 million won (669,792 U.S. dollars) by inflating costs for naval speed vessel engines and bribing Defense Ministry officials.

Retired employees of the company said high-ranking military officers frequently visited Doosan’s Incheon factory around the time of the engine delivery.

Some questioned the intent of the simultaneous criminal investigations into big companies after a four-month deadlock in the wake of the suicide of former President Roh Moo-hyun May 23.

One prosecutor said, however, “We just began investigation into companies suspected of amassing illegal funds based on evidence obtained through secret probes.”

Others say the move is related to President Lee Myung-bak’s emphasis on social responsibility by companies.

Another prosecutor said, “We have much intelligence on corporate corruption but conducting a probe smoothly is far from easy,” adding, “I understand that the investigations are focusing on embezzlement and slush funds.”

The business community has an alternative view, however. One businessman said, “The business community is disgruntled at prosecutors for carrying out probes for show after President Lee mentioned fighting corruption.”

Companies seem accordingly afraid of being a target of the investigation.

jefflee@donga.com run-juno@donga.com