By Na Jeong-ju
Prosecutors asked the court to issue arrest warrants for three LIG Group executives, Thursday, for manipulating accounting records in order to get permission from regulators for the issuance of commercial paper worth 189 billion won ($172 million).
The bonds were issued under the name of its construction unit, LIG Engineering and Construction, between October 2010 and March 2011 although the firm was on the brink of bankruptcy.
About 24.2 billion won of bonds were issued just days before the builder was placed under a court-monitored debt rescheduling program on March 21, 2011, prosecutors said.
The executives facing arrest are Koo Bon-sang, CEO of LIG Nex1 and the first son of group Chairman Koo Cha-won; group CEO Oh Chun-seok; and Chung Jong-oh, a former director of the construction unit.
The investigation is based on a complaint by the Securities and Futures Commission. The commission claimed the group decided to issue bonds, although the builder was not capable of repaying its debts. The firm had been suffering from financial difficulties caused by a slump in the local construction business and investment failures.
Prosecutors raided the offices of LIG Group and its affiliates in September and confiscated accounting books and computer hard disks.
Group chairman Koo Cha-won has also been banned from leaving the country. The 77-year-old is being investigated for allegedly creating a slush fund amounting to tens of billions of won by misappropriating company funds. He was questioned by prosecutors last week.