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With G20 meetings just around the corner the prosecution has brought to a halt its anti-corruption probes into some big businesses.
Owners and top executives of four big firms ― Hanwha, Shinhan Financial Group, Taekwang and C& Group ― have been under investigation over a variety of allegations such as the creation of slush funds, bribery and financial irregularities. There have been rumors that other firms will face probes but it remains to be seen whether the halt during the G20 meetings is temporary, or signals a premature end to investigations.
Prosecutors say the stoppage was preplanned as many observers note that the government has put top priority on the success of the business and global leaders’ summits.
``The G20 actually could end up giving us more time to build a stronger case,’’ a senior prosecutor was quoted as saying.
Sources in the business community say that it is important to hold accountable those who have done wrong, but hope that any protracted or expanded probe doesn’t backfire, dampening corporate efforts to sustain the recovery.
The government’s anti-corruption fighters are currently looking into four major cases.
The first is a complicated case involving the top three leaders of the Shinhan Financial Group, once the most profitable financial services provider. Basically, it is the result of an internal power struggle.
Its Chairman Ra Eung-chan has just stepped down after receiving a heavy penalty from the Financial Supervisory Service (FSS) for using “borrowed-name” bank accounts.
Shin Sang-hoon, the group’s CEO, is going down with him, with Shinhan Bank CEO Lee Baek-soon, his new right-hand man, suing Shin on charges of embezzling corporate funds.
Lee, who appears to have managed Ra’s borrowed-name bank accounts, is also facing suspicions that he used 300 million won ($271,000) of the money to bribe a high-level political figure.
Prosecutors plan to question the disgraced Shinhan trio after the G20 summit and say that the summons are expected to be the final part of their investigation.
The probe into Hanwha Chairman Kim Seung-youn is particularly awkward as he happens to be among the 15 Korean business leaders participating in the Nov. 10 and 11 Seoul Business Summit, a conference of global CEOs and high-profile business figures.
Prosecutors raided the headquarters of Hanwha and its affiliate, Hanwha Securities, in September and said they discovered scores of borrowed-name bank accounts that Kim might have used to keep an illegal fund, which is believed to amount to tens of billions of won.
Kim had been questioned by prosecutors during an investigation of Hanwha between 2004 and 2005 over allegations that he created a slush fund of around 8.7 billion won and used the money to bribe politicians ahead of the group’s acquisition of Korea Life Insurance in late 2002.
There is a possibility that the latter case can eventually be linked with the current investigation, according to prosecutors.
Summoning Kim is obviously inevitable, but prosecutors will only consider it after the G20 affair is over. Ironically, Kim has been placed among the corporate leaders to address finance-related issues for the roundtable discussions at the business summit.
The Supreme Prosecutors’ Office questioned C& Group Chairman Lim Byung-seok last month over his alleged involvement in managing a secret slush fund to grease the wheels on some of the company’s major merger and acquisition (M&A) deals in the past.
With the arrest warrant on Lim expiring next week, prosecutors are planning to indict him on embezzlement charges soon. But the questioning of other C& Group executives and bank insiders, who are suspected of being in on the scheme, will have to wait until sometime after the Nov. 11 and 12 G20 meetings, according to prosecution sources.
Taewkang Group Chairman Lee Ho-jin, who is alleged to have unlawfully transferred corporate wealth to the founding family and created secret funds to bribe politicians to land cable television deals, is also expected to be summoned by prosecutors after the meetings.
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