Keangnam Enterprises, which is being probed by the prosecution, allegedly carried out irregular lobbying with banking officials and financial authorities in a bid to get approval for huge loans, according to the Board of Audit and Inspection.

The prosecution recently asked the state auditor to hand over relevant documents to search for records of insolvent lending by banks to the midsized builder despite the firm’s poor financial health, investigators said Tuesday.

The investigators are focusing on whether Keangnam Enterprises enjoyed extraordinary favors in its financial transactions and other businesses on the backing of the former Lee Myung-bak administration, sources said.

While the builder suffered huge capital erosion between 2009 and 2011, banks reportedly issued it collective loans totaling about 2.2 trillion won ($2 billion).

The BAI estimates that the nonperforming loans out of this amount was 1 trillion won.

The Export-Import Bank of Korea reportedly topped the list with loans of 520 billion won, followed by the builder’s main creditor Shinhan Bank with 170 billion won, the Korea Development Bank with 60 billion won, Nonghyup with 50 billion won and Kookmin Bank with 40 billion won.

Industry insiders alleged that then-CEO Sung Woan-jong lobbied with regulatory officials at the Financial Supervisory Service and politicians to get the loans approved.

Sung, who was also the biggest shareholder of the firm, had served as the lawmaker of the ruling Saenuri Party, and is said to be a close confidant of Lee Sang-deuk, brother of the ex-president. He is likely to face a summons from the Seoul District Prosecutors’ Office in the coming weeks.

While the prosecutors initially targeted the firm’s alleged irregularities, involving embezzlement, during its overseas investments under the Lee administration-led resources development projects, its large amount of sour loans could lead investigators to summon some FSS officials and bank executives.

The company, which filed for court receivership last week, is also suspected of rigging financial statements to get higher credit ratings.

The prosecution is investigating alleged irregularities by a consortium of Korean companies, including Keangnam, formed to invest 300 billion won in an oil field development project on the Kamchatka Peninsula in Russia between 2005 and 2009. The consortium withdrew from the project in 2010.

Keangnam’s involvement in a nickel development project in Africa is another probe target.

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