Conglomerates face scrutiny over irregularities

By Park Si-soo

Staff reporter

The prosecution is moving to launch a large-scale investigation into big companies to determine whether they have been engaged in illicit fundraising or other irregular business deals, beginning as early as next month.

The move comes just days after President Lee Myung-bak chided top conglomerates, known here as chaebol, for their lackluster investment despite increasing profits and reluctance to hire more employees.

The upcoming scrutiny has been hinted through the recent reshuffle of major posts of the Supreme Prosecutors’ Office. Prosecutors with rich experience in investigating corruption grabbed control of the Central Investigation Department, an independent bureau dealing with high-profile cases involving politicians and heavyweight companies.

In a recent Cabinet meeting, President Lee criticized major Korean companies for their “unfair, outrageous and high-handed” treatment of small businesses and ordered ministers to come up with countermeasures.

According to sources, a senior prosecutor of the central department said in a private meeting that his “fingers itch to deal a blow” to firms suspected of having engaged in irregular deals.

The probe is expected to open as early as next month.

“Its intensity and scope could be tighter and wider than expected in order to restore public confidence in the prosecution,” said a source familiar with the prosecution’s internal affairs.

Separately, a prosecutor told a local newspaper that “We have amassed significant intelligence. We are mapping out how to deal with this.”

The prosecutor said the investigation will zero in on corruptive practices involving politicians and big companies suspected of creating slush funds, embezzling corporate funds and hampering fair trades.

The prosecution has seen its reputation tarnished following a series of scandals including the latest bribery case in which two senior prosecutors received bribes and sexual entertainment on a regular basis for years from a businessman in exchange for overlooking his wrongdoings.

It’s uncertain which companies will be affected. Many observers speculate Daewoo Shipbuilding and Marine Engineering (DSME) will be one. DSME is now under scrutiny for alleged bribery and other corruptive practices in a series of M&A deals, involving some senior employees.