Digging into the suspicious flow of money

The Suwon District Prosecutors’ Office has raided the SsangBangWool (SBW) Group for another round of investigation on suspicions related to its former chairman Kim Sung-tae. This time, prosecutors are tracking the allegation that the company smuggled millions of dollars in foreign currency to China in violation of the Foreign Exchange Trade Act.

The smuggling method has been well planned. Employees hid tens of millions of dollars in books or personal belongings in their luggage to fly to Shenyang. Korean citizens must report if they take out over $10,000 per person out of the border. Upon arriving at the airport of Shenyang, they handed over the money to the business group’s former vice chair who is now arrested, and took the next plane home.

The timing of the smuggling is also suspicious. The delivery had been made mostly in 2019 when SBW signed economic cooperation deals with North Korea’s Asia-Pacific Peace Committee and National Economic Cooperation Federation in Shenyang. Lee Hwa-young, former deputy governor of Gyeonggi who acted as peace ambassador, former SBW chairman Kim, and North Korean officials met in Shenyang during the period. Kosdaq-trading shares of Nanos (now SBW Life Science) jumped amid reports of the group gaining exclusive rights to North Korean minerals. SBW could have taken out some of its corporate funds to indulge North Korea. Even company employees suspected that corporate money went to North Korea.

The UN Security Council Resolution 2321 issued after North Korea’s fifth nuclear test in September 2016 raised alarms to member countries over any suspicious inflow of hard cash to North Korea as the money can go to its nuclear programs. If the money had entered North Korea, it would have betrayed international endeavors to contain North Korea’s nuclear weapons program.

There have been numerous collusive connections with the company and politicians and government officials. Lee — the former deputy Gyeonggi governor who used to serve as an outside director to SBW — was arrested for receiving bribes with access to its corporate card. A former prosecutorial investigator who was recruited to SBW also was arrested for tipping off the company ahead of the prosecutorial raid. Kim, the former SBW chair, fled the country with the tip-off and is yet to return.

The Yoon Suk-yeol administration has imposed separate sanctions on 15 individuals and 16 institutions of North Korea after North Korea’s latest series of missile launches and threat to carry out its seventh nuclear test. Although there can be a limit to the investigation as it requires Beijing’s cooperation, prosecutors must thoroughly probe the possibility of money transfer to North Korea.