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Former KNOC CEO detained
By Kim Se-jeong
Kang Young-won
By Kim Se-jeong
The prosecution has detained Kang Young-won, former CEO of the state-run Korea National Oil Corp. (KNOC), over allegations that he inflicted 1 trillion won ($1 billion) in losses on the firm after a failed investment in 2009.
Kang’s detention is part of an ongoing investigation into the “failed energy diplomacy” initiated under former President Lee Myung-bak. Kang was summoned for questioning early last month.
The Seoul Central District Court issued a detention warrant for Kang, Tuesday.
In 2009, the KNOC acquired Harvest Operations, a Canadian oil producer and its refinery unit North Atlantic Refining Limited (NARL) for 4.6 million won and 1.2 trillion won, respectively. The acquisition of NARL was a last-minute decision by Kang.
However, the state-run oil company ended up selling the NARL for 33.8 billion won last year after frequent loses by the unit. The sale caused the KNOC to lose almost 1 trillion won.
The prosecution’s probe began in January after the Board of Audit and Inspection (BAI) filed a complaint against Kang for breach of trust. The BAI suspected the KNOC of having rushed to acquire NARL without thoroughly reviewing the company’s value and performance.
Merrill Lynch, which acted as an investment advisor for the deal, also came under the prosecution’s investigation, as it was found that the NARL’s market value was exaggerated way above its actual standing.
The prosecution is also investigating if the acquisition was influenced by high-profile officials at the Ministry of Knowledge Economy, the predecessor of the Ministry of Trade, Industry and Energy, which approved the acquisition. Incumbent Finance Minister Choi Kyung-hwan was the then knowledge economy minister. The prosecution said it may summon government officials who were involved in approving the deal.