The head of South Korea's third-largest steelmaker was arrested Thursday over allegations he gambled abroad with embezzlement money.
Chang Sae-joo, the chairman of Dongkuk Steel Mill Co., is suspected of misappropriating about 20 billion won ($18 million) from Dongkuk Steel Mill by inflating the prices of raw materials the company purchased from abroad from 2005 to March this year.
Prosecutors suspect the 62-year-old used the slush fund to gamble in Las Vegas, Nevada, and made billions of won, according to intelligence they gathered from U.S. law enforcement authorities.
Judge Lee Seung-gyu at the Seoul Central District Court issued an arrest warrant, saying the charges have been substantiated.
It is the second time Chang has been arrested on gambling charges. He was detained by South Korean authorities in 1990 for gambling in Macau.
With the chairman's arrest, Dongkuk Steel has reportedly entered into "emergency" management mode with Vice Chairman Chang Sae-wook expected to take over the leadership tentatively in making major business decisions.
Chang, a younger brother of the chairman, had led Union Steel Co., an affiliate of Dongkuk Steel, until he was promoted to the vice chairman post in January when it merged with the steelmaking giant.
Observers said that the leadership vacancy might not result in serious business disruption, considering the younger brother's management experience.
Some still raised worries that Dongkuk Steel might face a bumpy road in corporate restructuring, which has been spearheaded by the chairman. Also, his arrest could hurt its credit ratings and eventually make it tougher to secure money needed to operate the company.
Since 2012, Dongkuk Steel has suffered setbacks in its business, hit by an industry-wide slump. In June last year, the steelmaker agreed with its main creditor, Korea Development Bank, to enhance its financial health and launched a large-scale corporate restructuring drive that included an asset sale.
Last month, Dongkuk Steel's board of directors approved a deal to sell its headquarters building located in downtown Seoul to Samsung Life Insurance Co. for about 420 billion won ($389 million). (Yonhap)