Probe shifts to Cho’s link to stocks while at Blue House

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Probe shifts to Cho’s link to stocks while at Blue House

Prosecutors are looking into whether former Justice Minister Cho Kuk was involved in his wife’s dubious stock investments when he was at the Moon Jae-in Blue House in 2018.

The Anti-Corruption Investigation Department II of the Seoul Central District Prosecutors’ Office questioned Chung Kyung-sim, wife of Cho, on Sunday about suspected financial crimes. It was the second round of questioning since Chung was taken into custody Thursday as a suspect in a series of corruption allegations.

The prosecution is focusing on the suspicion that Cho, a key political ally of Moon, was involved in Chung’s stock investing. Chung, her son and daughter invested a large sum in a private equity fund, Co-link Private Equity (PE), which later invested in the Kosdaq-listed WFM.

According to financial industry sources, the prosecution has obtained records showing that Cho transferred 50 million won ($42,731) to Chung using an automated teller machine near the Blue House in January 2018. The transfer took place when WFM’s stock price soared after Co-link PE took it over.

In early February 2018, WFM’s stock hit a peak of 7,500 won per share.

Cho, a professor of law at Seoul National University, joined the Moon Blue House as senior secretary for civil affairs in May 2017. He served until July 2019, and Moon nominated him as justice minister the next month. Despite prosecution investigations into his family’s wealth and his daughter’s academic career, Cho was formally appointed minister on Sept. 9, 2019. He resigned 35 days later as those investigations continued.

The prosecution suspects that Chung purchased 120,000 shares of WFM using a third party’s name in January 2018. Under the current law governing ethics of senior public servants, Cho and his spouse were barred from making direct stock investments at the time.

Prosecutors confiscated 120,000 WFM shares when they raided Chung’s younger brother’s home early last month. They suspected that Chung bought the stock at a suspicious price.

“Cho’s bank records must be laid bare to show the nature of the money transfer to Chung,” said Kim Kyung-yul, an accountant and former head of the Center for Economic and Financial Justice at the People’s Solidarity for Participatory Democracy (PSPD).

“I don’t know anything about WFM stock trade,” Cho told the JoongAng Ilbo on Sunday. “I also have nothing to do with it.”

Prosecutors are expected to summon Cho this week for questioning. Since the prosecution adopted new internal regulations Oct. 4, the media won’t be notified in advance about the questioning schedule.

Cho will also likely enter the prosecution building through an underground entrance, just like his wife, to avoid the media.

Meanwhile, a relative of the former justice minister, who was detained and indicted on suspected financial crimes linked to Co-Link PE, expressed a grudge toward Chung when he attended a hearing in his trial on Friday.

Cho Beom-dong, Cho Kuk’s first cousin, is being tried for embezzlement, breach of trust, stock price manipulation and destroying evidence. When Chung attended her arrest warrant hearing on Wednesday, she argued that she was wrongly accused of crimes committed by Cho Beom-dong.

At the trial on Friday, Cho, through his lawyer, complained about Chung’s remarks.

“We expected from the beginning that Chung would frame Cho,” said Cho’s lawyer. “My client is extremely angry to hear their argument that they did nothing wrong but were being framed for someone else’s crimes.”

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