Search for Chun money draws in brother-in-law

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Search for Chun money draws in brother-in-law

The prosecution yesterday questioned a brother-in-law of former President Chun Doo Hwan as they launched a formal investigation into suspected hidden assets of the Chun family.

The special Seoul Central District Prosecutors’ Office’s team dedicated to uncovering Chun’s squirreled-away wealth summoned Lee Chang-seok, the younger brother of former first lady Lee Soon-ja, yesterday morning.

The brother-in-law has long been suspected of being the manager of Chun’s slush funds.

Lee appeared at the prosecution accompanied by his lawyer yesterday morning.

Although he will be questioned as a witness for the time being, he could later be viewed as a suspect, a prosecution source said. The questioning is expected to continue late into the evening.

Prosecutors also said yesterday that they have formally launched an investigation into Chun’s slush funds.

In addition to the goal of uncovering assets Chun has stashed away and collecting the outstanding fine of 167.2 billion won ($150.12 million) that he owes the state, prosecutors are also investigating the Chun family and associates for possible legal violations in hiding money.

Chun came to power in 1980 through a military coup and ruled the country until 1988. In 1997, the Supreme Court convicted him of accepting massive bribes and running slush funds during his presidency. He was ordered to pay 220.5 billion won in fines.

The prosecution created a special team in May to uncover Chun’s illicit wealth. The National Assembly approved a special law in June and the prosecution has conducted a series of raids, searches and seizures on homes and offices of Chun’s family and associates since July 16.

This is not the first time for Lee to be investigated by the prosecution. In 2004, he was grilled for his role in a tax evasion case involving Chun’s second son, Jae-yong.

This time around, the prosecutors are looking into dubious real estate deals involving properties in Osan, Gyeonggi.

According to prosecution sources, Lee provided some of his properties in Osan as collateral for loans Chun Jae-yong’s real estate development company took out from banks.

The company, BL Assets, borrowed a total of 30 billion won from nine savings banks since 2008 for a development project in Seosomun-dong, central Seoul.

The prosecution is questioning Lee to discover if he broke any laws in the process.

Sources said the investigation is the first step toward revealing how Chun’s slush funds, kept in the form of bearers’ bonds, were replaced to Lee’s lands in Osan and then handed over to the Chun family again.

In 2006, Lee sold a large piece of land in Osan to Chun’s second son for 2.8 billion won, reportedly one-third of its market value at the time. Chun junior sold the land for 40 billion won the following year, raking in a huge profit.

The prosecution is seeking to prove that assets held by the Chun family, particularly his sons, actually came from the former president’s slush funds with the aid of Lee’s money management.

The special law allows the government to confiscate such assets to pay Chun’s outstanding fine, if they can prove that the money actually came from the former president.

The prosecution is also looking into the assets of Chun’s first son, Jae-kook, and third son, Jae-man. Jae-kook owns about 10 companies, including the publishing firm Sigongsa, and recently appeared on a list of people who have money in tax havens. He has also made large investments in real estate and has an expensive art collection.

Chun’s third son owns luxurious properties in Yongsan, central Seoul, and operates a winery in California. The prosecution is looking into how he funded the winery.

The sources said Chun’s first and second sons will soon be summoned for questioning to speed up the probe.

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