By Yi Whan-woo
The prosecution raided LIG Group and its affiliates Wednesday to probe allegations that its chief illegally issued huge sums of commercial paper last year.
Seoul Central District Prosecutors’ Office searched the headquarters of the group in Mapo-gu and its affiliates, including LIG Insurance and LIG Engineering & Construction.
The investigators also raided the houses of group Chairman Koo Cha-won and his family members who are suspected of involvement in the alleged activity.
The raid follows an earlier probe in August 2011 when the prosecution began looking into Koo, his first son Bon-sang and other family members on suspicion that they took part in issuing 24.2 billion won ($21.6 million) of commercial paper between February and March 2011 under the name of LIG Engineering and Construction.
The construction affiliate filed for court receivership on March 21 last year after suffering financial difficulties caused by a slump in the local construction business and soaring project financing loans.
The firm was not eligible to issue commercial paper under its name because of financial instability. Koo, however, allegedly acknowledged submitting fabricated data to financial regulators by hiding difficulties the construction company faced and issued the bills, according to the prosecution.
The prosecution said it confiscated accounting books, computer hard disks and other material that would support the allegations.
The investigators suspect Koo and his family members orchestrated the issuance of the notes prior to filing for receivership in order to retrieve stocks mortgaged by the group’s shareholders.
They added that they will find out who led the fraudulent scheme and whether the group illegally exploited its affiliates’ fund to help its construction company.
The prosecution said it will decide whether to summon officials of the companies involved after analyzing the confiscated materials. It added Koo and his family have already been banned from leaving the country for further investigation.