Not OK at SK

Scions linked to yet more dirty money

By Kim Tong-hyung

Storm clouds are gathering over SK Group as prosecutors attempt to unravel an alleged money-laundering scheme involving the conglomerate’s billionaire scions and a plastic surgeon.

Investigators at the Seoul Central District Prosecutors’ Office, looking into suspicions of business irregularities surrounding SK Vice Chairman Chey Jae-wan, have found evidence that he attempted to launder around 10 billion won in ill-gotten gains with help from an owner of a cosmetic surgery clinic in southern Seoul.

According to a report by the Hankook Ilbo, a sister paper of The Korea Times, Chey passed the money through the bank account of his scalpel-wielding friend before spending it on purposes yet to be disclosed.

Prosecutors have summoned the plastic surgeon, identified only as Kim, who denies accusations of wrongdoing but refused to say what the money was for, vaguely explaining that there had been a personal transaction between him and Chey, according to the newspaper.

Chey, the younger brother of SK Chairman Chey Tae-won, has been banned from leaving the country since July as prosecutors look into allegations that he embezzled from corporate coffers to create a slush fund in the range of tens of billions of won.

SK’s founding family is also suspected of bribing tax officials and bloating its pile of dirty money through subcontractors, which were creative with their accounting and managed to secure illegal loans from a suspended savings bank.

Members of the Chey family have frequently starred in corruption scandals over the years. Chey Tae-won has been under scrutiny since it was found that he lost some 100 billion won on a futures investment, which raised questions over the source of the funds and the reason why one of the richest men in Korea was involved in such a high-stakes gamble.

Prosecutors believe that the SK chairman attempted to soften his personal losses by intercepting some of the investment SK subsidiaries made into Benex Investment, a financial company owned by former SK Telecom Vice President Kim Jun-hong, who happens to be on trial for stock manipulation.

Prosecutors are also looking into the bribery allegations involving SK and former National Tax Service (NTS) officials. Lee Hee-won, the NTS’s ex-investigations chief, was found to have received 50 million won a month from an SK subsidiary since leaving his post in 2006.

During his time at the tax agency, Lee had conducted tax screenings on SK affiliates for years, which raised concerns that the payments were made in return for having given SK companies favorable assessments. Former NTS deputy chief Hur Byung-ik was also accused of receiving 200 million won from SK since retiring in 2009.

It appears that Chey Tae-won has been working closely with his brother in creating slush funds, a connection that was exposed after the prosecution closed in on Benex’s Kim, who was arrested in May for involvement in manipulating the share prices of resource developer, Gloworks.

While investigating the case, prosecutors discovered 17.5 billion won worth of checks in Kim’s personal safe, which were found to belong to the SK vice chairman.

The Chey brothers are also accused of unlawfully raising funds through three SK subcontractors, who had to manipulate their financial numbers, such as overstating costs.

The three companies also received 7 billion won in loans from the suspended Samhwa Savings Bank, which was sidelined by financial authorities in February after reeling from soured construction loans. Prosecutors say it’s possible that the money was used for Chairman Chey’s ill-fated futures investment.

Previously, Chey Tae-won was involved in a massive accounting fraud scandal involving 1.5 trillion won that landed him five years probation in 2008.

And last year, Chey Chul-won, a cousin of the chairman and former president of SK’s logistics arm, M&M, was arrested for assaulting a trucker and trying to pay him 20 million won in exchange for his silence.