By Park Si-soo
The prosecution is investigating several top family-controlled conglomerates or “chaebol,” broadening its sweeping crackdown on corrupt businesses and politicians.
The Central Investigation Division (CID) of the Supreme Prosecutors’ Office ㅡ an independent unit that deals with high-profile corruption cases involving influential politicians and social heavyweights ㅡ is orchestrating the investigation.
About 10 investigators raided the headquarters in Seoul and local offices of C& Group, a second-tier conglomerate, Thursday, which prosecutors suspect has created a slush fund through illegal deals, and bribed politicians and bureaucrats. They confiscated computer hard disks and accounting documents.
The group’s chairman Lim Byung-seok, 49 was taken into the CID office in southern Seoul in the evening to be questioned over the allegations, a rarely swift summons made on the same day as a raid.
The prosecution suspects C& Group succeeded in taking over a number of companies through a series of behind-the-scene deals with officials “at the top.”
The move by the central bureau is drawing keen attention from the business world, as investigations into Hanwha and Taekwang are already underway.
C&, which currently has 41 affiliates, diversified its business through aggressive mergers and acquisitions during the 2003-2008 Roh Moo-hyun administration.
The CID, headed by senior prosecutor Kim Hong-il, has stayed idle for about one and a half years. Former President Roh’s suicide last year at the height of a probe into a bribery scandal surrounding the former president and his family by the division stirred a fierce public backlash against it and consequently enforced the unprecedentedly long hiatus.
Observers say the latest raid sent a clear signal that the division is flexing its muscles to launch a sweeping crackdown on corrupt businesses and bigwigs in line with President Lee Myung-bak’s efforts to establish a “fair society.”
Sources said “two or three among the top 10 companies here” will be added to its investigation list any time soon. They did not elaborate on who the presumed firms were.
A prosecutor familiar with the case said, “This is part of efforts to root out corruption in business.”
The central division’s “revival” was hinted at earlier this week by Prosecutor General Kim Joon-gyu. In a National Assembly audit of the Supreme Prosecutors’ Office in southern Seoul, Monday, Kim said, “The division has recently switched to ‘action mode.’ It’s just a matter of time before it takes action.”
The prosecution has been investigating Hanwha, a major family-owned conglomerate that posted more than $23.5 billion in sales worldwide in 2009, since last month over an allegedly massive slush fund stashed away through obscure financial transactions among its affiliates, a criminal charge which the group strongly denies.
Another company Taekwang, the 40th largest firm, is grappling with widening investigation over its alleged illegalities behind its business expansion in recent years. Taekwang Chairman Lee Ho-jin is facing a summons for questioning over the charges by the prosecution.
Some raise questions over the motivation behind the latest probes, saying they are politically-motivated moves against companies built up under the support of the prior administration, whose overall policies were out of sync with the current government.
Others say these are a reflection of President Lee’s disappointment with big companies that are reluctant to keep their word in making efforts to help small and mid-sized companies.
In response to President Lee’s request, major firms, including Samsung Electronics, Hyundai Motors and LG, pledged to raise funds of around 37.5 billion won ($33.2 million) and support cash-strapped minor firms with it. But a recent report made public through a parliamentary inspection showed their reluctance in complying with the commitment.