Casino executives grilled in corruption probe

2010-04-04 01:30

Prosecutors yesterday questioned top executives of a local casino as part of their inquiry into corruption allegations surrounding Kangwon Land in Jeongseon, Gangwon Province.
The nation`s only casino operator open to Koreans is suspected of having amassed secret funds by inflating its expenditures on building its energy-generating facility. Last June, Kenertec, a local firm specializing in green energy technology, won the contract, which was worth about 25.8 billion won ($23.1 million).
The casino allegedly exaggerated the actual amount it spent to construct the facility, which was about 11 billion won. Investigators are also investigating suspicions that some of the purportedly illicit money was exploited to lobby figures associated with former President Roh Moo-hyun.
On Wednesday, investigators searched the casino headquarters, its Seoul office and the homes of the president and other executives, seizing materials regarding the contracts related to building its facilities.
Kangwon Land, which was established in June 1998, has been accused of being a hotbed of illicit political funds and money laundering, as most of its profits are generated in cash.
Prosecutors are also expediting their inquiry into the allegations swirling around Prime Group, the operator of Techno-Mart, one of the largest electronics shopping malls in Seoul.
The group is suspected of having accumulated huge slush funds from its affiliates. The group swiftly consolidated its presence as an industry leader under the previous two administrations by aggressively acquiring affiliates, thereby stoking speculation that it might have lobbied key government officials for business favors.
The group has recently joined a series of big construction projects such Hallyu Wood, a major cultural complex in Ilsan, Gyeonggi Province, and in the Yongsan area.
Prosecutors at the Seoul Western District Prosecutors` Office have barred five top executives of the group from leaving the country, including Chairman Baek Jong-heon.
Investigators recently rummaged through the group`s headquarters in Seoul. They also searched the National Tax Service to obtain the results of the tax authorities` recent audits of 10 of the group`s affiliates. Twenty three boxes of documents were seized. Prosecutors said they found about 10 suspicious borrowed-name accounts after analyzing the NTS audit materials.
Meanwhile, on Wednesday, prosecutors at the Busan District Prosecutors` Office questioned Hyun Jae-hyun, chairman of Tong Yang Group, regarding his alleged involvement in the group`s acquisition of Hanil Synthetics Co. last year through illicit means.
Tong Yang Major, the group`s construction arm, is accused of having acquired Hanil through a leveraged buyout, which is illegal. A leveraged buyout is the acquisition of a company via substantial borrowed funds or debt. Hyun denies all charges, asserting that he was not aware of the leveraged buyout.
Prosecutors claim that Hyun caused financial damage to his firm by employing the illicit buyout measure for the 374.5 billion won acquisition deal. Choo Yun-woo, the chief of Tong Yang Major, was arrested in July on breach of trust charges. Choo is also alleged to have handed 1.89 billion won to the then vice president of Hanil Synthetics Co. after Choo asked him to ensure that Tong Yang Major would be the successful bidder in the acquisition.
By Song Sang-ho
(sshluck@heraldcorp.com)
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