Probe widens in C& slush fund scandal

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Probe widens in C& slush fund scandal

C& Group Chairman Lim Byung-seok, under investigation for influence-peddling and embezzlement, admitted during a warrant hearing over the weekend to meeting with politicians, but said that such actions are quite common for a group chairman.

The hearing was held Saturday at the Seoul Central District Court, which issued the warrant.

Lim, 49, was arrested last week over suspicions that he had embezzled about 100 billion won ($88.5 million) of corporate money for a slush fund to bribe politicians and government officials.

Prosecutors are accusing Lim of fraud and breach of trust during his hostile takeover of companies in trouble after the 1997 Asian financial crisis. C& Group, which started as Chilsan Shipping in 1990, grew into a group with 41 affiliates before running into recent serious financial trouble.

“When you run a business, you are bound to meet politicians,” Lim said during his warrant hearing. “I met politicians, but what I’ve done is not even close to the average of what others did.”

The central investigation unit of the Supreme Public Prosecutors’ Office had applied for a detention warrant to question Lim about the allegations.

As a part of the probe to find out Lim’s connection to politicians and senior officials, the prosecution will focus on allegations that an executive of a major commercial bank was influenced into giving loans to C& Group in 2006 and 2007.

At the hearing, prosecutors said Lim had window-dressed the accounts of one affiliate, C& Woobang, to deceive banks into providing 180 billion won in loans to finance takeovers.

The prosecution said it seized evidence allegedly showing that Lim had ordered his company to make it appear that C& Woobang was profitable. Lim argued that it was impossible for a businessman with 41 affiliates to issue such a specific action.

The prosecutors also said Lim had caused creditors and shareholders to lose money in his takeover strategy by issuing corporate bonds and then selling the acquired firm’s assets to make the bond payments. Lim was also accused of ordering financially healthy C& affiliates to loan money to a failing affiliate.


By Hong Hye-jin, Ser Myo-ja [myoja@joongang.co.kr]

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