No politicians swept up in SillaJen probe, prosecutors say
Four current and former executives — including SillaJen CEO Moon Eun-sang and former CEO Lee Yong-han — have been arrested and charged with violating the Financial Investment Services and Capital Markets Act, officials with the Seoul Southern District Prosecutors' Office said during a briefing on the interim results of a 10-month-long investigation into the biopharmaceutical company.
Five other individuals related to the irregularities were booked without detention.
Moon was previously arrested May 12 on insider trading charges, after he allegedly sold millions of shares in the company just before a failed clinical trial caused the stock price to tank in August.
Moon allegedly dumped his stock just before an announcement that Pexa-Vec, SillaJen's cancer drug candidate, had failed its Phase 3 clinical trial.
However, prosecutors also noted that those allegations are undermined by the fact that the current and former executives sold the shares early 2018, while the failed clinical test was in March 2019.
Moon and Lee have also been accused of improperly extending their control over the company by taking over bonds with warrants (BWs) through a shell company in March 2014. Two executives of a financial investment company that provided funds were also booked without detention.
The former and current executives turned a profit of 191.8 billion won ($159.9 million) through the BWs, according to prosecutors.
Moon separately has been accused of granting 460,000 shares with inflated prices to five acquaintances between March 2015 and March 2016, pulling in a profit of 3.8 billion won.
There has also been various media speculation on ties between SillaJen and the administration.
Lee Cheol, the former CEO of Value Invest Korea (VIK) who has been imprisoned for financial fraud since last year, is known to have close ties with Rhyu Si-min, the head of the Roh Moo-hyun Foundation and an outspoken liberal pundit.
As of September 2014, Lee was the top SillaJen shareholder, adding to the speculation of illegal actions by the administration. Ryu and some ruling party officials were also spotted attending a SillaJen event in June 2015, according to media reports.
However, the prosecution said Monday after tracking SillaJen accounts, there was no link found between the company and Rhyu or the Roh Moo-hyun Foundation. Prosecutors added that “no substance of lobbying allegations raised by the media could be confirmed.”
Prosecutors said that Moon collected assets worth 135.4 billion won, including a high-end residence, which will be confiscated if they were obtained through unfair methods.
Prosecutors said they are continuing the investigation, but noted that the bulk of the probe has effectively concluded.
BY LEE HOO-YEON, SARAH KIM [firstname.lastname@example.org]