Woongjin raided over fund-raising

Prosecutors yesterday raided Woongjin Group on suspicion that the executives of the conglomerate and its subsidiaries deliberately raised funds last July even though it had prior knowledge of an imminent downgrade of its credit ratings.

Chairman Yoon Seok-keum and others are accused of issuing 100 billion won ($91 million) worth of commercial papers (CPs) and misleading investors.

Typically, only companies with an excellent credit rating are eligible to borrow money through CPs.

The prosecutors brought another charge against the chairman, saying he dumped shares of its education unit Woongjin ThinkBig, predicting that the stakes will plunge after the likely court receivership that took place last October.

The legal forces said he dodged 128 million won in losses by doing so.

The search and seizure operation came after the nation’s securities regulator lodged a complaint against Woongjin’s chairman with the prosecution on charges of the unfair borrowing practice in early May.

The Securities and Futures Commission, an arm of financial regulator Financial Services Commission said that five executives of Woongjin issued the CPs under the name of the group even with acknowledgement that the group had lost its ability to pay back its debt.

A group of investigators and prosecutors of the Seoul Central District Prosecutors’ Office confiscated relevant documents and computer files during the raid of the group’s headquarters in central Seoul and five other offices.

They also raided the residence of Chairman Yoon and two other executives.

Prosecutors said they will soon summon Woongjin executives to question them over whether there was any unlawful involvement in the process of issuing CPs, according to the Yonhap News Agency.

The probe deals a huge blow to the already-troubled company.

Its Woongjin Holdings has been placed under a court-run restructuring plan since last October after its affiliate Kukdong Engineering and Construction failed to repay a 15 billion won loan from Hyundai Swiss Savings Bank.

BY PARK EUN-JEE [ejpark@joongang.co.kr]