Arrest warrant sought for former chief of STX

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Arrest warrant sought for former chief of STX

The Seoul Central District Prosecutors’ Office sought an arrest warrant on Tuesday for the former head of the trading and shipbuilding conglomerate STX Group on charges of business malpractice and embezzlement.

Kang Duk-soo, the 64-year-old former CEO who led the group from 2003 to February this year, is accused of funneling funds from STX Heavy Industries, a shipbuilding unit, to support other crippled affiliates, prosecutors said.

Kang is suspected of misappropriating company money worth 80 billion won ($87 million) for a housing construction project in Guam led by STX Construction.

Prosecutors have also zeroed in on Lee Hee-bum, the former minister of trade, industry and energy, for his alleged involvement in the misappropriation. Lee was chief executive of STX Heavy Industries during that time, and an official said he will soon be summoned for questioning.

Kang was called upon by the Seoul Central District Prosecutors’ Office twice last week on Friday and Saturday, and state officials are seeking an arrest warrant for further questioning. Arrest warrants have also been sought for three other former high-ranking executives on the same charges.

The probe into the former chairman’s activities was launched in February when the company filed a complaint against Kang and four other former executives.

Kang resigned from his post the same month under pressure from his creditors and claimed he would take responsibility for the mismanagement.

The state-owned Korea Development Bank, the main creditor of STX Offshore and Shipbuilding that held more than half of the conglomerate’s total revenue, was reported by local news outlets to have alleged last year that creditors were urging Kang to hand over his position for a new external hire.

Once the country’s 13th-biggest conglomerate in terms of assets, STX Group grew rapidly until the global financial crisis in 2008, when the company was hit hard by the decline of the shipping and shipbuilding industries. Approximately 90 percent of the company’s sales came from those sectors.

Kang, a self-made tycoon, began his career as a salaried worker at a local cement company and built his way up to be the president of Ssangyong Heavy Industries, the predecessor of STX Group.

He expanded the company’s businesses through corporate mergers and acquisitions.


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