Probe into Osstem Implant embezzlement widens to include chairman

An Osstem Implant employee, center, is escorted by police officers into the Gangseo Police Station in Seoul, Jan. 6, after being caught for allegedly embezzling 188 billion won from his company. Yonhap

By Bahk Eun-ji

The investigation into the country's single largest embezzlement case involving an employee at Osstem Implant is widening to look into possible accomplices or involvement of higher-ranking company officials, following his testimony about “slush funds.”

On Saturday, a local court issued an arrest warrant for the employee, surnamed Lee, 45, on charges of embezzlement, saying he was likely to flee or destroy evidence.

Lee is accused of manipulating balance sheets so as to embezzle 188 billion won ($156 million) in company funds between March and October last year ― which allegedly accounted for 90.81 percent of the dental implant producer's equity.

He allegedly transferred 5 billion won from the company account to his own and then again back to the company account, and repeated this as if testing the firm's accounting inspection system.

As this act was not detected, he then allegedly transferred 48 billion won five times, and 10 billion won once in October.

Based on this, the police suspect he did not commit the crime accidentally but preplanned it.

He allegedly spent 143 billion won of the money in acquiring a 7.62 percent stake in Kosdaq-listed Dongjin Semichem in October, but sold it for 111.2 billion won in October, seeing some losses.

Among the 111.2 billion won, Lee allegedly used 68 billion won to buy 851 gold bars weighing 1 kilogram each and transferred the rest to multiple bank accounts.

The police have found 67 billion won so far, about half of the embezzled money, including 497 gold bars worth 34 billion won at a residence in Paju, Gyeonggi Province, where Lee had been hiding when he was caught on Jan. 5. They are searching for the remainder, including 354 gold bars.

Reporters wait outside of the Seoul Southern District Court, Saturday, during the court's review on whether to issue an arrest warrant for an employee of Osstem Implant charged with embezzling company funds. Yonhap

The case has brought suspicions about the possible involvement of other higher-ranking company officials, as the amount of money was too large to be stolen by a manager-level individual and the act was not discovered by company inspections for months.

During police questioning, Lee said he committed the crime to create a slush fund but the scheme did not go as planned because of the loss from the Dongjin Semichem stock purchase, and he provided some of the gold bars to Osstem Chairman Choi Kyoo-ok, according to NoCut News, Saturday.

In this regard, Lee's lawyer told reporters, Friday, “It doesn't make sense to see that he did it alone considering his position and the amount of funds.”

Police questioned two employees of the company's finance department on Friday, who allegedly forged the balance sheets to hide the misuse of the funds under Lee's direction.

Earlier on Thursday, a civic group filed a complaint with the police against Chairman Choi and CEO Um Um Tae-kwan for embezzlement and stock price rigging, and the police plan to launch an investigation soon into the pair.

As to the suspicions, the company has repeatedly denied the alleged involvement of the chairman and other high-ranking company officials in the case.

“What the employee said about the chairman is not true. It is a clear false claim to disturb the police investigation into the hidden gold bars,” Osstem said in a written statement, Friday.

The company said it plans to take legal action against acts of spreading false claims and defaming the chairman.

Nevertheless, this case sheds new light on the chairman's earlier conviction of embezzlement and breach of trust in 2014, when the company's stock transaction was suspended. Choi, who was CEO at the time, and some other executives were indicted over providing illegal rebates worth billions of won to dentists. Choi was given a three-year jail term suspended for four years.