KT&G CEO under slush fund probe
By Jung Min-ho
Min Young-jin
Prosecutors are investigating the head of Korea’s largest tobacco maker over allegations of embezzlement and breach of trust.
According to Seoul Central District Prosecutor’s Office, Tuesday, KT&G CEO Min Young-jin is suspected of having pocketed billions of won to create a slush fund.
Prosecutors believe Min created the slush fund via inter-subsidy dealings since he became the company CEO in 2010. It is unclear how much money he may have taken.
In an effort to diversify its business, KT&G took over several companies, including Somang Cosmetics and Mazence, which is now named KT&G Life Sciences, over the past few years.
Investigators suspect he mainly used Somang, which KT&G acquired in 2011, to raise the slush fund. In 2012, the cosmetic firm made an operating profit of 2.5 billion won ($2.1 million), but posted operating losses for the next two years. Prosecutors are looking into whether the losses were linked to his alleged crime.
The prosecution is tracking down bank accounts of Min and other high-ranking officials at KT&G. Some local media outlets reported that incumbent and former officials of the company have already faced questioning.
“We are trying to figure out what exactly prosecutors are investigating,” a KT&G PR official said. “We will try our best to cooperate with them.”
Industry sources say the investigation is part of a wider targeting of CEOs of former public companies who were appointed under the previous Lee Myung-bak administration.
Min was named KT&G head in 2010 and was reappointed in early 2013, a month before President Park Geun-hye’s inauguration. His second term will end in February.
For Min, this is not his first investigation for corruption.
In 2013, prosecutors and police investigated Min and other senior KT&G executives on suspicion of breach of trust in connection with a real estate development project.
They were suspected of having bribed a government official to get approval for the construction of a hotel in Namdaemun, central Seoul.
Although they raided the headquarters of KT&G, investigators did not find solid evidence so they later dropped the charges against company officials.
More recently, the Fair Trade Commission (FTC) fined the company 2.5 billion won for forcing retailers not to sell cigarettes from foreign competitors in February.
According to the FTC, KT&G signed an unfair contract with eight convenience store chains, under which KT&G products had to account for up to 70 percent of cigarettes on display.