Court turns down Hanwha arrests

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Court turns down Hanwha arrests

The Seoul Western District Court Monday dismissed a request for arrest warrants for five former or current officers of Hanwha Group, disappointing prosecutors who have worked five months investigating whether the company maintained illegal slush funds.

“It is hard to see that the suspects are likely to flee or destroy evidence,” the court said. “Furthermore, given the documents [submitted by prosecutors] and evidence, we found that it is necessary to protect the right of defense of the suspects without arrest [because of a lack of crucial evidence].”

Since September, Seoul’s Western Prosecutors’ Office has investigated the nation’s 10th largest conglomerate on the suspicion that group chairman Kim Seung-youn embezzled company money and maintained a slush fund of about 107 billion won ($95 million). In December, prosecutors summoned the chairman for questioning three times.

Prosecutors have twice requested arrest warrants for Hong, 62. On Dec. 3, they filed a request that was dismissed by the court for the same reasons as Monday.

They tried again on Jan. 20 for Hong and four other executives, saying they found more evidence that Hong deliberately sold the stock of two Hanwha subsidiaries at a cheap price, resulting in damage to the group, which led to yesterday’s rejection.

Prosecutors suspect that Kim ordered Hong Dong-ok, former chief financial officer for the group and now CEO of petrochemical company Yeochun NCC Co. Ltd., to embezzle the company funds.

After the court’s rejection, the prosecutor’s office said yesterday, “The total damage to the conglomerate by Kim and his employees’ embezzlement, breach of trust, and manipulation of the stock price of the company amounts to 512.1 billion won.” They will look for other ways to reapply for the arrest warrants, the prosecutors said.

Former CFO Hong is suspected of allegedly loaning about 350 billion won to Hanwha subsidiaries owned by Kim using bank accounts in other people’s names.

The prosecutors have been criticized for lax investigations. Critics say Nam Ki-choon, chief prosecutor of the Seoul Prosecutors’ Office, tries to get suspects to confess without conducting a thorough probe.

“Investigating conglomerates is a formidable and difficult task, so it takes time to finish,” Bong Wook, a senior prosecutor said yesterday to reporters.

“We started this investigation with five borrowed-named bank accounts,” he said, “and now the number of accounts with borrowed names we found is 300.”

By Kim Hee-jin []
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