Probe focuses on Woori’s C& loans

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Probe focuses on Woori’s C& loans

Prosecutors investigating C& Group’s alleged slush fund and influence-peddling are looking into whether the state-run financial watchdog, the Financial Supervisory Service, thoroughly reviewed the group’s 227.4 billion won ($203.9 million) loans from Woori Bank between 2006 and 2008.

Prosecutors said that C& Group borrowed large sums on different occasions from Woori Bank when Park Hae-choon was Woori’s chairman. Park’s brother, Park Taek-chun, was head of C& Heavy Industries.

Prosecutors plan to question the Park brothers soon.

According to prosecutors, Woori Bank offered a total of 227.4 billion won in loans to C& Group and its affiliates - C& Heavy Industries, C& Woobang and others - as of October 2008. Of the 227.4 billion won, Woori Bank lent 136.7 billion won to C& Heavy Industries between 2006 and 2008 when the company wanted to expand its shipbuilding business.

Prosecutors said they believe that Park Hae-choon, who headed Woori Bank from March 2007 to May 2008, approved the loans for his younger brother’s company.

According to prosecutors, C& Group named the younger brother as the head of C& Heavy Industries shortly after the older brother was appointed Woori Bank’s chairman in 2007.

Prosecutors have been conducting a secret investigation into an allegation that the FSS didn’t take action on suspicious financial transactions between Woori Bank and C& Group.

“If it turns out the loan was illegal, the prosecution plans to investigate the Financial Supervisory Service, too,” said a prosecutor who asked not to be named.

An official at the FSS who also asked for anonymity told the JoongAng Ilbo that the financial watchdog monitored the loans between Woori Bank and C& Group but “it didn’t find flaws in particular.”

Prosecutors also plan to summon C& Group Vice Chairman Lim Sung-joo after sources told the prosecution that Lim allegedly met and lobbied former and current prosecutors whenever the company was in trouble.

Meanwhile, Minister without Portfolio Lee Jae-oh’s interview with a local newspaper fueled anger among opposition Democratic Party lawmakers after he said the prosecution’s investigations into C& and Taekwang Group are targeting the main opposition Democratic Party.

Rumors circulating in political circles say that the prosecution’s investigation into the companies are allegedly aimed at hunting down former officials from the Roh Moo-hyun administration. The two companies grew rapidly during Roh’s presidency.

Park Jie-won, the DP’s floor leader, denounced the Lee Myung-bak government and said the administration’s slogan should be changed to “inspection society” from “fair society.”

In a meeting with senior party officials yesterday, DP Chairman Sohn Hak-kyu showed solidarity with Park.

“Investigations on corporations are widening,” Sohn said. “If the probes are political retaliation against the former government and opposition party, the people won’t tolerate it,” Sohn said.

Kim Moo-sung, Grand National Party floor leader, urged the prosecution to wrap up the investigations.

“The probes must be wrapped up quickly so that the National Assembly will focus on dealing with an important task, passing next year’s budget,” Kim said.

By Jeon Jin-bae, Kim Mi-ju []
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