LIG Group raided for unit’s illegally issued CP

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LIG Group raided for unit’s illegally issued CP

Prosecutors raided the headquarters of LIG Group and its affiliates on suspicion that they illegally issued billions of won in commercial paper for a construction subsidiary that was about to go bust.

The Seoul Central District Prosecutors’ Office said yesterday it raided the headquarters of the LIG Group in Mapo District, western Seoul, and three affiliated firms: LIG Engineering & Construction, LIG Insurance, and LIG Nex1, a leading defense company. They also raided the headquarters of Woori Investment & Securities in Yeouido, western Seoul, which sold to retail investors commercial paper issued by LIG.

The prosecution sent prosecutors and investigators to the offices and seized computer hard drives, servers, account books and related documents.

The prosecution also raided the houses of Koo Cha-won, 76, the chairman of LIG; his eldest son, Bon-sang, 41, the vice chairman of LIG Nex1; and his second son, Bon-yeop, 39, vice chairman of LIG E&C.

The prosecution said Koo and his family are suspected of issuing 24.2 billion won ($21.6 million) worth of commercial paper of LIG E&C from Feb. 28 to March 10 in 2011 before the company filed for court receivership.

The construction firm filed for receivership on March 21, 2011, after suffering financial difficulties caused by the recession in the local construction industry and growing project financing loans.

Woori Investment has sold 80 percent of 197.6 billion won in commercial paper that was issued by LIG E&C, including 24.2 billion won worth that was issued just before the subsidiary filed for court receivership, rendering it worthless.

“We have been investigating the case with officials of the LIG groups,” a spokesman of the Seoul Central District Prosecutors’ Office told the JoongAng Ilbo. “But we decided to send the investigators to the corporations in order to secure necessary evidence.” Koo and his two sons were forbidden from leaving the country by the prosecution in February.

The prosecution suspects that Koo and his family wanted to get back shares they offered as a guarantee when they took over LIG E&C in 2006 before the corporation filed for receivership.

TAS Corporation, an affiliate and the largest shareholder in LIG E&C, borrowed 300 billion won from banks to take over the construction corporation.

Koo’s two sons are the major shareholders of TAS, and they put up their shares as a guarantee to banks.

“We are trying to find out whether Koo and his sons were aware of the corporation’s move toward court receivership when they issued the commercial paper,” a spokesman of the prosecution told the JoongAng Ilbo.

LIG Group was established in January 2006 and took over Hanbo Construction & Engineering in June 2009. It filed for court receivership after 1 trillion won worth of losses from failed construction projects and unsold buildings.

On its Web site, LIG calls itself “the admired and loved company.”

By Kim Ki-hwan, Yonhap []
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