Hyosung Slush Fund Questioned
Lawyers and activists have urged the prosecution to reinvestigate allegations that Hyosung Group created a slush fund through subsidiaries at home and abroad.
The call came as the prosecution hurriedly wrapped up its probe into the group over claims that one such fund had been set up overseas.
During the investigation, only a couple of Hyosung's incumbent and former executives were indicted, without physical detention.
The lenient stance toward Hyosung has burdened President Lee Myung-bak. A nephew of Hyosung CEO Cho Suck-rai, currently chairman of the Federation of Korean Industries, tied the knot in 2001 with President Lee's youngest daughter.
NGOs are calling for the reinvestigation, arguing that authorities scaled back the probe, apparently in deference to the ties between President Lee and group chairman Cho.
The Supreme Prosecutors Office had looked into suspicious deals between 2007 and 2008 and concluded they were very likely illegal.
Hyosung is suspected of creating tens of millions of dollars in a slush fund, using offices in the United States, Hong Kong and Singapore. The nation's 30th-largest company was also suspected of evading taxes through accounting irregularities.
In addition, in early 2008, the Anti-Corruption and Civil Rights Commission asked the prosecution to investigate the group, following a whistleblower's tip that it had created a 20-30 billion won slush fund through a subsidiary in Japan.
The Korea Financial Intelligence Unit also detected suspicious money transactions by the group and reported this to the prosecution.
Based on the information, the prosecution started investigations in September last year. Three month later, it arrested a former Hyosung manager for embezzling 1.5 billion won, seen as part of Hyosung's slush fund.
No progress was made, and on Sept.30 the prosecution concluded the probe.
A prosecutor involved in the case said, "We found no evidence of an alleged slush fund having something to do with the Hyosung chairman and his family members."