Big detergent company mired in slush fund scandal

By Kim Rahn

The vice chairwoman of fabric conditioner company Pigeon has been questioned over the alleged creation of a slush fund, according to prosecutors.

Investigators of the Seoul Central District Prosecutors’ Office said Tuesday that they recently interrogated Lee Ju-yeon over the claims.

She is the eldest daughter of Lee Yoon-chai, founder and chairman of Pigeon who was given a jail term at the end of last year for hiring thugs to attack the company’s former CEO, Lee Eun-wook.

The 78-year-old father and his 48-year-old daughter face suspicions of embezzlement and breach of trust, as they allegedly created a slush fund worth billions of won with company money. The father has also been questioned.

“We suspect the company inflated payments for subcontractors and later received the margin again. We quizzed the Lees over whether they directly ordered the fund’s creation or connived with company officials conducting the illegality,” a prosecutor said.

The prosecution earlier secured evidence that the founding family and executives of the firm embezzled a huge sum of corporate funds. It raided the company’s headquarters in southern Seoul and homes of the family and other key executives in June, seizing computer files and accounting books.

Prosecutors have since summoned several managers and employees of the company for questioning.

In a separate inspection by the National Tax Service in January, the daughter was found to have offered kickbacks to officials of the Northern Incheon District Tax Office in 2010 in return for having the company’s taxes reduced.

She became vice chairwoman in October last year as her father couldn’t manage the firm after being accused of involvement in the attack on the firm’s former CEO.

Last December, the elder Lee was sentenced to 10 months in prison on charges of instigating violence with the verdict upheld at an appellate court in January.

Lee Eun-wook was ousted by the company’s board four months into his tenure in February last year and he filed a lawsuit against the Pigeon chairman. The ex-CEO was rumored to be plotting a return to management, to seek a reversal of his dismissal.

But he was attacked by masked men near his home and hospitalized in September and accused the chairman of orchestrating the attack.