Prosecutors vowing to crack down on financial crimes

Justice Minister Han Dong-hoon pledges allegiance to the flag at the Government Complex in Gwacheon, Gyeonggi during his appointment ceremony on Tuesday. [YONHAP]

The state prosecution service announced Wednesday a sharper focus on financial and securities crimes a day after Justice Minister Han Dong-hoon vowed the same in his appointment speech.

The Seoul Southern District Prosecutors’ Office said its economic crime investigation division will be enlarged to become the Financial and Securities Crime Joint Investigation Team.

The expanded division will consist of 48 personnel and will focus on financial and securities crimes, including unfair trading practices in the capital market, such as market price manipulation.

The expansion of the economic crime division signals a renewed drive by the state prosecution service to crack down on such crimes after its activities was hemmed in by Choo Mi-ae, the previous justice minister under former President Moon Jae-in.

In January 2020, Choo disbanded the previous financial crimes joint investigation division, which consisted of prosecutors, investigators and experts from financial watchdog agencies, the Korea Exchange and the National Tax Service (NTS).

The previous joint investigation team was nicknamed the “Grim Reaper of Yeouido” following its establishment in February 2014. Yeouido is Seoul's financial district. It conducted investigations into 965 cases and arrested 346 people for violations of the Capital Markets Act.

The Seoul Southern District Prosecutors’ Office said members of the newly expanded joint investigation team will include seven prosecutors, 29 investigators from the state prosecution service and 12 from the Financial Services Commission, Financial Supervisory Service, Korea Exchange and NTS.

The team is expected to track illegal funds and capital transfers, crack down on tax evasion, audit company finances, compile transaction data, and seize the proceeds of criminal financial activity.

With the state prosecution service losing its ability to start investigations of crimes following the passage of a prosecution reform law earlier this month, the expanded division may not be as powerful as its “Grim Reaper” predecessor.

The law does not come into effect for another four months, and is currently subject to a challenge before the Constitutional Court.

“The [government’s] capability to respond to financial and securities crimes will be strengthened with the launch of a professional investigation team that combines the prosecution’s investigative experience with the expertise of external agencies,” the office said in a statement.

“We will try to establish market order by ensuring that stock price manipulation is sternly punished through an immediate and systematic investigation into those who disrupt the capital market.”

During his nomination process as President Yoon Suk-yeol’s first justice minister earlier this month, Han vowed to reinstate and empower a securities crime joint investigation team.

In his statements, Han said that such a division was urgently needed to address increasingly sophisticated and wide-ranging securities crimes causing damage to ordinary people.

The division’s expansion has increased speculation that the state prosecution service may try to reopen investigations into prior high-profile financial scandals involving Lime and Optimus funds, as well as a probe into SillaJen, a disgraced biotech company. High-profile politicians have been accused of involvement in those scandals.

BY MICHAEL LEE [lee.junhyuk@joongang.co.kr]