By Lee Hyo-sik
Investigators raided SK Group headquarters and offices of group executives Tuesday as part of an investigation into the alleged creation of slush funds and other irregularities.
Group Chairman Chey Tae-won and his younger brother Jae-won are suspected of having been deeply involved in the misappropriation of corporate funds.
The Seoul Central District Prosecutors’ Office said Tuesday it sent about 20 investigators to SK’s headquarters in downtown Seoul at 6:30 a.m. and searched the offices of SK Holdings and SK Gas. They seized hundreds of accounting documents and computer hard disks containing records of corporate financial transactions.
Prosecutors also searched the homes and offices of SK Group executives suspected of playing key roles in business irregularities orchestrated by the founding family. But the homes of the Chey brothers were spared from Tuesday’s search and seizure operation.
Investigators also raided the Seoul Regional Tax Office, SK Telecom and SK C&C to secure documents related to bribery allegations against Lee Hee-won, a former senior tax official who received over 3 billion won from an SK subsidiary after he left his post in 2006. Lee is suspected of canceling a planned tax investigation into the group and providing other business favors to the company while in office.
The prosecution has been looking into allegations that Chairman Chey attempted to soften his personal investment losses by intercepting some of the 280-billion-won investment SK subsidiaries made into Benex Investment, a financial company owned by former SK Telecom Vice President Kim Jun-hong.
Kim has been charged with stock manipulation on the tech-heavy KOSDAQ.
In April, Chey was found to have suffered a loss of over 100 billion won in futures investment. He claimed it was his own money.
“We have been tracing bank accounts opened under Benex and Kim’s name to check whether some of the investment money was transferred back to SK subsidiaries. We think such transactions took place and the money was to make up for Chairman Chey’s investment losses,” a prosecution official said. “Tuesday’s raid was intended to look more closely into money flow between Benex and SK firms.”
After completing the analysis of the confiscated documents, prosecutors are widely expected to summon the SK chairman and others involved in the case.
Additionally, investigators are probing allegations that Chey Jae-won, who has been banned from leaving the country since July, created a slush fund amounting to tens of billions of won.
Jae-won, a senior SK Group vice chairman and CEO of SK E&S and SK Gas, is suspected of having made excessive payments to SK affiliates’ three business partners by inflating costs. The companies then gave part of the payments back to him.
In July, prosecutors raided the three firms allegedly helping the vice chairman create the fund. They believe that it was used to finance the ill-fated futures investment by his older brother.
The investigation into the Chey brothers began when the prosecution was probing Gloworks, a natural resources development arm of SK Group. The company’s CEO was arrested on charges of stock price manipulation in March. Investigators also raided Benex Investment as its CEO Kim was involved in the dubious scheme.
Cashier’s checks worth 17.5 billion won were found in Kim’s private safe during the raid. The checks were traced back to SK vice chairman Jae-won, prompting investigators to look into his finances.
In response to Tuesday’s raids, SK officials said the Chey brothers did not create slush funds nor misappropriate company money.