Scores of investigators from the Seoul Central District Prosecutors’ Office raided the headquarters of the nation’s 14th largest conglomerate in central Seoul and several other offices and residences of its executives.
The group with 86 affiliates is suspected of creating a 7-billion-won ($6.3 million) slush fund through fake trade deals with paper companies it established overseas.
|The headquarters of CJ Group in Seoul. (Ahn Hoon/The Korea Herald)|
It is the first criminal investigation into a large business group under President Park Geun-hye.
The investigators seized computer hard disks, account books and relevant documents from the offices and residences, which reportedly included the home of a senior financial manager.
The prosecutors are also tracking down bank accounts held by group officials and affiliates that were allegedly used for amassing the illegal money.
The Korea Financial Intelligence Unit, a state-run financial watchdog, recently detected suspicious money transactions and referred the case to the prosecution.
“Allegations raised against the firm so far have proven groundless. The company will fully cooperate with the prosecution in the investigation,” an official from the company said.
Running various businesses ranging from entertainment, bio-pharmacy to construction, the conglomerate has long been suspected of creating slush funds.
In 2007, the firm’s affiliate CJ Engineering and Construction was faced with charges of setting up illicit funds but the prosecution closed the case due to lack of solid evidence.
The firm was accused of inflating costs in a construction project and pocketing the difference.
In a different case in 2008, prosecutors traced around 40 bank accounts of CJ Group’s executives believed to have formed slush funds.
The suspicions surfaced while they were investigating an accountant of the conglomerate in connection with a contract-murder attempt.
The accountant had loaned 18 billion won out of money he managed for CJ chairman Lee Jay-hyun to a swindler for investment purposes in 2007.
When the swindler threatened to disclose the source of the money, which he insisted was slush funds of chairman Lee, the CJ official was alleged to have hired a hit man to try to kill the blackmailer and recover his investment money back.
The total amount of money the official surnamed Lee kept on behalf of the chairman was said to have exceeded 50 billion won. The two Lees are not related.
The Supreme Court found the official of the firm not guilty in 2009.
CJ Group also bought art pieces worth around 142 billion won from Gallery Seomi, one of the most prominent art galleries in Korea, from 2001 to 2008, and was accused of using the art for slush funds at the time.
The company said the money for the purchase was inheritance from chairman Lee’s parents and that he paid all due taxes.
By Kim Young-won (firstname.lastname@example.org)