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Published : 2014-06-16 21:44
Updated : 2014-06-16 21:44

Confidants of fugitive Yoo Byung-eun have partly admitted the allegation that subsidiaries of Chonghaejin Marine Co. were exploited as funding tools of the de facto owner of the sunken ferry Sewol.

While the prosecution is striving to arrest Yoo and reveal his misconduct, the Incheon District Court on Monday held the first trial hearing on eight heads of the Chonghaejin units, who have been indicted for pocketing company funds that were reportedly offered to their parent group or the 73-year-old business tycoon.

Though some of the eight denied the charges, the others admitted to irregular intragroup trading with parent group Chonghaejin Marine, the operator of the Sewol, and Yoo’s family.

Most of them, however, argued that they were pressured to conduct the intragroup deals by Yoo’s close aide Kim Phil-bae, who has reportedly fled to the United States, and Yoo’s second son Hyuk-gi.

The Korean police have already filed an Interpol red notice against Kim, 76, who earlier worked as chief of Moonjin Media, a key unit of Chonghaejin Marine.

“We admit the charges over (dubious) flow of funds. But the accused were only salaried CEOs. (The accused) committed the practice as directed by Kim Phil-bae,” said an attorney for Byun Ki-chun, the head of Chonhaiji, an affiliate of Chonghaejin.

The eight indicted included heads from the embattled group’s main affiliates, including Semo Group, Ahae and Dapanda.

According to data compiled by the prosecution and financial authorities, Chonghaejin Marine and its subsidiaries have expanded their investment in properties nationwide over the past decade, with collective real-estate assets reaching 184 billion won ($175 million).

Law enforcement agencies said that investigators are focusing on cross-shareholding and potentially irregular funding among the affiliated firms via real estate investments.

Their properties across the country came to 1.09 million square meters and the real estate sector takes up more than 30 percent of Chonghaejin Marine group’s total assets. Chonhaiji topped the list with holdings of properties worth 83 billion won in Goseong, South Gyeongsang Province, followed by Semo with 29.3 billion won-worth of realty in Bupyeong-gu, Incheon.

Meanwhile, the Incheon District Court is reviewing charges against Yoo’s older brother Byung-il and female confidante Shin Myung-hee to approve or reject a request from the prosecution for arrest warrants.

The elder Yoo has been grilled by investigators over consulting fees he allegedly received, the owner family’s suspected misappropriation of funds and the whereabouts of the fugitive ferry owner.

Shin, along with the female follower Kim Myung-sook, 59, are suspected of sheltering Yoo. They are called “mother Shin” and “mother Kim” by devotees of the Salvation Sect, which is allegedly led by the fugitive.

By Kim Yon-se (kys@heraldcorp.com)

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