Koo Cha-won, chairman of embattled LIG Group on Friday vowed to compensate for the victims of the latest fraud committed by LIG affiliates, indicating he may dip into his own pockets if necessary.

“I deeply apologize to all the victims of the commercial paper fraud, and regardless of exactly who or what was the cause of this issue, I will take full responsibility,” said a teary Koo at a press conference held at the LIG Group headquarters in Seoul. 

He said he would establish detailed compensation plans before the year is out.

On Oct. 25, prosecutors sought the arrest of Koo’s eldest son Koo Bon-sang and a former and incumbent top executive of LIG affiliates in connection with allegations that the Koo family fraudulently issued commercial papers worth multiple billions of won last year.

LIG is charged with issuing some 24.2 billion won ($21.6 million) of commercial papers between late February and early March 2011 under the name of LIG Engineering and Construction, a company that was teetering on the brink of court receivership.

The papers were issued despite that LIG was clearly aware it would rendered incapable of redeeming them.

The objective of the scheme was to recover the company stocks that had been offered as collateral for bank loans. Soon after, LIG Engineering and Construction filed for court receivership.

Over 700 investors are said to have become victims of the fraud, according to prosecutors.

The group is also suspected of submitting fabricated data to financial institutions to hide its misdemeanor regarding the CP issuance, according to prosecutors.

By Kim Ji-hyun (jemmie@heraldcorp.com)