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Suspicious Cash Flow of Major Shipbuilder`s Supplier Probed

Suspicious Cash Flow of Major Shipbuilder`s Supplier Probed

Posted September. 13, 2010 11:51,   


Prosecutors said Sunday that they are investigating whether billions of won (millions of dollars) in suspicious cash flow of a major shipbuilder’s supplier went to government officials and politicians.

The Supreme Prosecutors’ Office said the suspicion arose while investigators tracked the flow of money embezzled by the CEO of a supplier to Daewoo Shipbuilding and Marine Engineering. The CEO is in police detention.

Prosecutors said that between 2004 and last year, he embezzled 60 billion won (51.5 million dollars) by inflating prices on the books when his company and its affiliates supplied parts to Daewoo and bought parts from their suppliers.

It is uncertain where billions of won in cash were spent except for money that went to the supplier’s affiliates.

Prosecutors said they are focusing on where the cash went and have found how the money was used to a certain degree. They are trying to find hard evidence, however, because of the difficulty of probing people who are alleged to have received his money based on the CEO’s statements.

A prosecutor said, “Since he was vague on how he gave the money, we are focusing on securing specific evidence based on tracing bank accounts and witness statements.”

A rumor is also circulating that the CEO gave money to members of the ruling Grand National Party in return for business favors.

The probe into the CEO will end Wednesday, when his detention term for investigation expires. Prosecutors will then decide whether to subpoena people suspected of direct or indirect involvement in the embezzlement and breach of trust in the course of creating slush funds.

Also under investigation is how the three children of Sejoong Namo Tour President Chun Shin-il obtained a significant portion of stocks from the CEO’s companies.

Prosecutors are investigating whether their takeover of the stocks in the first half of 2008 was against the law and where the money for the transfer came from. They also want to know why Daewoo made an advance payment to the supplier of 57 billion won (48.9 million dollars).

By the time the CEO is prosecuted, prosecutors will decide the scope of the investigation to the alleged slush fund and embezzlement only or expanding it to a large-scale probe into the lobbying of politicians.