Political parties differ on fund scandal investigation

Ruling Democratic Party of Korea Chairman Rep. Lee Nak-yon speaks during a Supreme Council meeting at the National Assembly in Seoul, Monday. Lee called for a separate body to investigate wrongdoings by high-ranking government officials amid a sweeping financial fraud scandal involving lawmakers, government officials and prosecutors. / Yonhap

By Kang Seung-woo

In the wake of a tell-all letter by a jailed key suspect in a massive fund scandal, political circles are clashing over how to uncover the truth of a financial fraud case that allegedly involves lobbying of politicians from both the ruling and opposition parties, government officials and prosecutors.

The ruling Democratic Party of Korea (DPK) insists that the nation must accelerate its efforts to launch a unit to investigate wrongdoings by high-ranking government officials and that the scandal be the first target of the unit, while the main opposition People Power Party (PPP) wants the appointment of a special counsel.

The scandal centers on two asset management companies, Lime Asset Management and Optimus Asset Management, whose sham private equity funds generated more than 1.6 trillion won ($1.4 billion) in losses for 4,000 investors. After heavy investment losses, the companies declared they were unable to return money to investors in October last year and June this year, respectively.

The investment fraud cases have expanded to the political sector following allegations that the companies lobbied or engaged with several influential people, including presidential officials and ruling party lawmakers to cover up the fraud, which prompted the opposition to slam the Moon Jae-in administration.

However, the situation abruptly changed after Kim Bong-hyun, the main suspect in the Lime fraud case, disclosed in the letter, Friday, that he also lobbied opposition lawmakers as well as sitting prosecutors, one of whom participated in the investigation into the scandal later. Kim was arrested in April on charges of embezzlement.

Kim Chong-in, right, interim leader of the main opposition People Power Party, speaks during a party meeting at the National Assembly in Seoul, Monday. Kim called for a special counsel to be appointed to investigate the financial fraud scandal allegedly involving two asset management companies and their alleged lobbying of politicians. / Yonhap

Both the ruling and opposition parties are saying they cannot trust the prosecution's investigation anymore, especially when it is alleged some prosecutors were lobbied by the suspects in the scandal. But they differed on then who should take charge of the investigation.

“If Kim's letter from prison turns out to be true, it means that the prosecution selectively investigated the cases to hurt the reputation of Cheong Wa Dae and the ruling party,” Rep. Kim Nam-kuk of the DPK said.

DPK Chairman Rep. Lee Nak-yon also said he would speed up the launch of the Corruption Investigation Office for High-ranking Officials. “The Kim letter shows the prosecution did not investigate the lobbying allegations properly. A thorough investigation should be made,” he said in a party meeting at the National Assembly, Monday.

Setting up the office was one of President Moon's key goals in reforming the prosecution. The organization was supposed to be launched in mid-July according to a relevant law, but the PPP has opposed to it, saying the new office will have unprecedented power which would be unconstitutional.

The main opposition party, on the other hand, is seeking a probe by a special counsel.

“We officially propose an investigation by an independent counsel to deal with the scandal in the most objective way,” PPP interim chief Kim Chong-in said in a party meeting, Monday.

“If the ruling party has nothing to fear and hide (as it claims lobbying allegations of ruling bloc figures are not true), it has no reason to oppose the probe by a special counsel,” another PPP official said.