Prosecutors probe Hanwha chairman
The chairman of Korea’s 10th-largest conglomerate was called in by prosecutors 77 days after investigators from the Seoul Western District Prosecutors’ Office raided the headquarters of Hanwha Group and its affiliate Hanwha Securities as part of an investigation into whether the company maintained illegal funds.
Before turning himself in to the prosecution, Kim received questions from reporters waiting outside the Seoul Western District Prosecutors’ Office on whether he admitted to the allegations.
His answer was simple. “I first need to get to the prosecution and hear about the investigation [from prosecutors],” Kim told reporters prior to turning himself in at 1:50 p.m. yesterday.
Prosecutors had initially focused on investigating Kim for allegedly raising slush funds for bribing government officials to win business favors, but they failed to find critical evidence over how the money was used.
Kim had been suspected of being the owner of 69 billion won ($60 million) kept in borrowed-name bank accounts.
Prosecutors later shifted their focus of the probe into allegations that Kim orchestrated 290 billion won worth of illegal loans from Hanwha Group to Hanwha’s subsidiaries and subcontractors in 2005.
In connection to the allegations, prosecutors yesterday sought an arrest warrant for Hong Dong-ok, chairman of Yeochun NCC, who served as the chief financial officer for Hanwha Group and its affiliates for eight years starting in 2002.
Yeochun NCC was established in 1999 as a joint venture between Hanwha and Daelim.
Prosecutors yesterday questioned Kim on whether he had ordered Hong to launder money. Prosecutors obtained evidence that Hong was involved in Hanwha Group’s illegal lending of 290 billion won for its subsidiaries, including Hanwha Dream Pharma.
Prosecutors say they have obtained evidence showing that Hanwha Group illegally lent 290 billion won to its affiliates, and they are now investigating whether the Hanwha chairman pocketed some of that money.
Hanwha Group officials denied the charges, saying that the loans were made under legitimate procedures and were part of group restructuring.
Regarding allegations of the 69 billion won kept in borrowed-name accounts, Hanwha Group officials said, “It’s unregistered inheritance that the current Hanwha chairman inherited from his father, founder of Hanwha.”
A company official said yesterday that the money was mistaken for a slush fund but that Hanwha Group will take steps to pay taxes on the inheritance.
Prosecutors have been investigating Hanwha since auditors at the Fair Trade Commission reported to the Supreme Public Prosecutors’ Office in July that they discovered five borrowed-name bank accounts at Hanwha Securities. A former Hanwha Securities official tipped off the Fair Trade Commission about the suspicious bank accounts.
In September, investigators said they obtained circumstantial evidence that Hanwha Group’s secretariat contacted the ex-worker to persuade him not to report the matter but failed.
By Kim Mi-ju, Lee Chul-jae [email@example.com]