Nonghyup under probe for alleged slush fund and illegal loan

By Jhoo Dong-chan

The prosecution is expanding its investigation into Nonghyup, the National Agricultural Cooperative Federation, for allegedly creating a slush fund and giving illegal loans to a resort company.

Investigators of the Seoul Central District Prosecutors' Office Thursday raided the offices of a construction company in southern Seoul, seizing its account books and computer data.

The company has won numerous bids for construction or remodeling projects for distribution facilities managed by the federation.

Prosecutors said they found evidence that the company raised a slush fund by overstating costs for the projects, and are looking into whether the money was linked to the federation.

The previous day, they also raided the headquarters of Resom Resort, a leisure company, and the offices of its four affiliates for suspicious loans from Nonghyup.

Although the raid mainly targeted alleged embezzlement by company's President Shin Sang-Soo and other executives, the prosecution is also investigating how the company has been able to borrow over 100 billion won ($86 million) from Nonghyup despite financial difficulties since 2005.

Regarding the suspicious favors to the company in its loan process, the prosecution may investigate possible corruption between the heads of the company and the lender, including Nonghyup Chairman Choi Won-byung, who was one of the close aides to former President Lee Myung-bak.