Railway probe widens to include high officials

The prosecution has questioned more than 30 high-ranking officials of a state-run railway regulator to verify whether they were involved in bribery allegations surrounding the Korea Rail Network Authority (KRNA).

The public railway corporation is accused of favoring two local parts suppliers in their bidding processes.

The move came four days after Kim Kwang-jae, who served as the president of the KRNA until January, committed suicide while he was being investigated for his potential involvement in the alleged railway corruption scandal.

Kim was under investigation following testimony from a Saenuri Party spokesman who said that Kim received 30 million won ($29,640) from the chairman of AVT, a railway parts supplier.

The summoned officials hold ranks equivalent to or higher than a division head and were partly tasked with solidifying deals with Sampyo E&C and AVT, the parts suppliers, since 2011.

The Seoul Central District Prosecutors’ Office said that the summoned officials are suspected of signing internal documents that allegedly directed the exclusion of a U.K. railway parts company in a 2012 bid to supply railway fastening parts for the construction of the Honam High Speed Railway. AVT finally won the bid.

Among them, the former head of the railroad division at the KRNA is suspected of playing a key role in connecting influential figures from both the public railway regulator and private suppliers.

Having graduated from the same university as the former KRNA President Kim, the division chief, surnamed Choi, often arranged meetings between the state-run regulator and private companies. Prosecutors suspect that graduates of Yeungnam University were at the center of the allegations.

“Choi often contacted the executives of AVT, as well as Sampyo,” said a senior source from the KRNA. “I heard that the head of the KRNA and the chairmen of the private companies mainly talked about the deals in closed meetings that Choi arranged.”

Prosecutors have ended their investigation into the late Kim, though they have expanded the probe to include those in the political sector.

Kim’s suicide note suggests that political forces may have played a role in the alleged bribery scandal.

As part of the investigation, the prosecution has arrested Kwon Young-mo, the senior deputy spokesman of the Saenuri Party.

Kwon confessed to handing over funds from the chairman of AVT to Kim in order to give the company exclusive rights to supply key parts. Prosecutors suspect Kwon, who was a legal consultant to AVT, acted as a middleman for the company.

Investigators pointed out that the revolving door between public regulators and private companies is the primary reason for such corruption scandals. Private parts and construction companies are often eager to hire former presidents of public corporations, assuming that they can use their influence in selecting bidders.

“The railway industry is vulnerable to the drawbacks of the revolving door practice because there are a lot of large construction deals going on between public and private companies,” a prosecutor said. “We’re targeting those who once served at KRNA but moved on to private companies in order to find more cases.”

BY LEE YOO-JEONG [ejpark@joongang.co.kr]