Nexon, Naver heads embroiled in scandal

Senior prosecutor under probe over huge stock gains

By Kim Jae-won, Yoon Sung-won

Jin Kyung-joon, commissioner of the Korea Immigration Service

Kim Jung-ju, Nexon’s founder and chairman of NXC

Kim Sang-heon, Naver CEO

The government ethics committeesaid Monday that it was investigating the chief immigration officer for allegedly peddling his influence in trading Nexon shares to reap more than 12 billion won in gains from selling the stock.

The Government Public Ethic Committee said it had issued a questionnaire to Jin Kyung-joon, commissioner of the Korea Immigration Service, asking for explanations on how much he paid to buy non-listed Nexon shares in 2005. He is suspected of buying shares in the game company at 40,000 won per share, far lower than market price of between 100,000 won and 150,000. Nexon was listed on the Tokyo Stock Exchange in 2011.

“Our ethics department is dealing with the case,” said an official at the Ministry of Personnel Management in charge of the committee.

Last month, Jin reported that he earned 12.6 billion won last year by selling 801,500 shares in Nexon. That represented a 3.79 billion-won increase in his personal wealth from the previous year. High-ranking government officers are obliged to report their wealth every year by law.

Analysts said that the key issue is whether Jin paid the appropriate price when he bought the shares, not how much he gained by the sale.

“The most important thing in this case is how he knew about Nexon’s move and did he pay the appropriate amount for the shares,” said Lee Jong-woo, head of IBK Securities’ research center. “It is not unusual for investors to make big gains by selling shares after a company is listed.”

Market watchers raised the question as to whether Jin acquired the stock for a lower price using his connections to Kim Jung-ju, Nexon’s founder and chairman of NXC, the game maker’s holding company. Jin and Kim are known to be close friends, attending Seoul National University together in the late 1980s.

Nexon chief Kim and Naver CEO Kim Sang-heon have been urged to cooperate with the ethics committee in the investigation of the stock trading. The committee has sent requests for explanations to about 10 people including the NXC chairman and Naver CEO.

Nexon, the nation’s largest online game company, pledged cooperation, while the operator of the nation’s top web portal remained cautious about clarifying its position in the alleged scandal.

“We have not confirmed that the request for explanation has arrived. But our policy is to sincerely cooperate with the investigation,” an official at Nexon said Monday.

A Naver official said, “We have not decided on a concrete position yet.

Jin has said he bought shares of Nexon in the early 2000s, saying that the investment opportunity had been initially offered to a friend of his, who then decided to share the information with many of his own friends, including Jin. He stressed that there was no wrongdoing involved.

Critics wonder whether the investigation will affect the general election scheduled for Wednesday. The Ministry of Justice had drawn criticism for being reluctant to launch an investigation into Jin, raising suspicions that it is seeking to protect one of its own.

Investigators for the committee are collecting information on whether Jin favored Nexon when he worked for the Korea Financial Intelligence Unit (KoFIU) for two years between 2002 and 2004. Jin bought Nexon shares right after he quit the agency.