CJ case unravels at a rapid pace

It has only been three days since the prosecution raided the CJ offices for an illegal slush fund, but the pace of the investigation into the country’s 14th-largest conglomerate is markedly faster than previous cases. The prosecution banned the chairman of the food and entertainment giant conglomerate from leaving the country yesterday.

The prosecution was able to conduct such a rapid investigation because they have been preparing for it since 2008, with a 10-page letter that the former finance manager wrote the same year to Lee Jay-hyun, CJ Chairman, to report details of the slush fund operation that was stored in a USB drive as a hidden file.

On Tuesday, the prosecution said that CJ created an overseas slush fund worth nearly 7 billion won ($6.3 million). It suspects the group funneled the money into a shell company established in Hong Kong in 2008. That company allegedly purchased the group’s stock and sold the shares about a year later at a 30-40 percent profit.

According to the prosecution, the CJ finance official, identified by his surname Lee, 43, began managing the chairman’s bank accounts opened under borrowed names from 2005.

In order to increase the chairman’s fortune, the finance manager decided to invest the fund in a series of redevelopment construction projects and illegal gambling businesses in cooperation with a man surnamed Park, a private moneylender. He lent about 17 billion won, a portion of the chairman’s slush fund, to Park to launder the money. The business didn’t go well and the finance manger wasn’t able to collect the money he lent to Park who knew the source of the investment money.

The finance manager then decided to kill Park. He hired two hit men for 300 million won to kill Park and bring all the documents related to the business.

Around 2 a.m. on May 27, 2007 in an alley of Nonhyeon-dong, southern Seoul, the two hit men hit Park in the head with a wrench and took a handbag that contained about 110 million won worth of bank notes and a notebook.

Park reported it to police, but they weren’t able to catch the suspects for another year.

In 2008, the Seoul Metropolitan Police Agency (SMPA) re-launched an investigation for the surprise assault case after securing intelligence from the financial district that said “a finance manager of a large conglomerate hired hit men to kill a person he has lent a large sum of money.”

The police were able to trace the finance manager and filed a detention warrant two times, but both were denied by a local court. The prosecution, which doubted the court’s decision, decided to intervene in the case.

The Central District Prosecutors’ Office received evidence that the SMPA previously secured, and then found the 10-page letter that was stored as a hidden file in the USB drive. The file was partly damaged, but was completely restored by the prosecution, and they were eventually able to secure crucial evidence related to the CJ chairman’s slush fund. CJ’s slush fund was discovered for the first time.

In the letter, the finance official reported details about 100 billion won worth of art suspected to be purchased from Hong Song-won, head of Gallery Seomi, an art gallery in Cheongdam-dong, southern Seoul.

In February, the Seoul Central Prosecutors’ Office said the gallery was suspected of intentionally not issuing receipts and hiding revenue from selling art since 2007, evading about 3.5 billion won in taxes.

“We have been tracing the chairman’s slush fund based on the letter,” a spokesman of the prosecution said.

The prosecution currently judges that the finance manager wrote this letter not only to report the art but also to blackmail the chairman to help him with legal trouble.

By Lee Ga-young, Kwon Sang-soo [sakwon80@joongang.co.kr]