Prosecutors raid LIG Group, affiliates over fraud charges

Prosecutors raided the offices of LIG Group and its affiliate firms early Wednesday as part of an investigation into allegations that the group chief and his family members illegally issued multi-billion won of commercial papers last year.

Scores of prosecutors and investigators searched several offices of LIG Group, LIG Insurance Co. and LIG Engineering & Construction Co., as well as the residences of group chief Koo Cha-won and his family members engaged in running the affiliates located in Seoul earlier in the day to confiscate accounting books, computer hard disks and other relevant materials that would support the allegations.

In August last year, the Seoul Central District Prosecutors' Office launched an investigation into suspicions that LIG Group Chairman Koo and his first son Bon-sang, among other family members, were involved in issuing some 24.2 billion won ($21.6 million) of commercial papers between late February and early March in 2011 under the name of LIG E&C, which was on the verge of coming under court receivership.

The construction firm filed for receivership on March 21, 2011, after suffering financial difficulties caused by the recession in local construction business and growing project financing loans.

The group is also suspected of submitting fabricated data to financial institutions to hide such facts and issue the bills, according to prosecutors.

The investigators said they suspect the Koo family masterminded the issuance of the notes prior to filing for receivership aimed to retrieve stocks mortgaged by the group's shareholders, adding they will look into who led the fraudulent scheme and whether the group illegally exploited its affiliates' fund to help the ailing construction firm.

The prosecutors said they will decide whether to summon officials of the companies involved after analyzing the confiscated materials.

(Yonhap)