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Ex-KNOC head questioned over 'failed energy diplomacy'
By Lee Kyung-min
Kang Young-won
By Lee Kyung-min
The prosecution questioned Kang Young-won, former CEO of the Korea National Oil Corp. (KNOC), Monday over allegations that he caused more than 1 trillion won ($1 billion) in losses to the state-run company through improper investments in 2009.
The summons is part of an ongoing probe into the “failed energy diplomacy” of the former Lee Myung-bak administration.
When attending the Seoul Central District Prosecutors’ Office in southern Seoul, Kang told reporters, “I’ll tell everything to prosecutors. I’ll fully cooperate in the investigation.”
Prosecutors questioned him over why and how he decided on the investment in Harvest Operations, a Canadian oil producer, and its money-losing refinery unit, North Atlantic Refining Limited (NARL).
In 2009, the KNOC acquired Harvest and NARL for 4.6 trillion won and 1.2 trillion won, respectively. The acquisition of NARL was not its initial plan, but it was included at the last minute.
It is alleged that the KNOC did not properly review the affiliate’s business value, and took it over at 1.2 trillion won, much higher than market value, as it needed to make up for its stagnant mergers and acquisitions performance.
As NARL’s losses grew, the KNOC ended up selling the company for a mere 33.8 billion won last year, incurring more than 1 trillion won in losses.
“We interrogated him about why he pushed ahead with the acquisition of NARL, why no proper appraisal of the deal was conducted prior to the signing, and whether other high-profile officials in the Lee administration were included in the takeover,” a prosecutor said.
“After reviewing his answers and other evidence, we’ll decide whether to seek an arrest warrant against Kang.”
The prosecution launched the probe in January after the Board of Audit and Inspection (BAI) filed a complaint against Kang for breach of trust.
The investigation may expand to former officials at the Ministry of Knowledge Economy, the predecessor of the Ministry of Trade, Industry and Energy, which approved the acquisition. Finance Minister Choi Kyung-hwan was then knowledge economy minister.
Last month, about 30 investigators seized documents and computer files from the KNOC headquarters and Kang’s home.