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Choco Pie prince accused of embezzlement

Sept 13,2018
Confectionery giant Orion Group is under fire over allegations that Chairman Tam Chul-kon embezzled 20 billion won ($17.7 million) from the company to pay for his vacation home.

Tam was summoned by the police on Monday to be questioned on allegations that he spent the money to build an 890-square-meter (9,580-square-feet) summer house in Yangpyeong County, Gyeonggi, between 2008 and 2014.

The claim first surfaced in April last year in a petition filed by a group of former Orion employees to the Seoul Central District Court regarding Tam’s misdeeds. The police raided the company’s headquarters in April this year.

During Monday’s questioning, Tam denied that accusations, saying that the facility was never planned or used for private purposes but as a training center for company employees.

“Chairman Tam and his family never stayed at the place,” Orion said in a statement released Tuesday afternoon. “Since its completion in 2014, 1,098 employees have used it during 32 training sessions.”

Orion claims that the controversy is rooted in false accusations repeatedly raised by Orion Group’s former President Cho Kyung-min.

Having built his career inside the group for nearly 30 years, Cho was once a close aide to Tam and his wife Lee Hwa-kyung, second daughter to Orion’s late founder Lee Yang-gu. In 2012, Cho was imprisoned for two and a half years for embezzling around 30 billion won from the company.

“Cho has been requesting company money since his release and lost two trials claiming rights to 20 billion won since then,” Orion said.

Last year, Cho sued Tam and Lee, saying that he did not receive rewards promised by the owner couple for successfully running some projects, a claim which the chairman has denied. The district court dismissed the case twice on the grounds that there were no documents to prove the accusation.

Orion states that it was Cho who was the core decision maker in charge of the construction of the Yangpyeong facility and that Tam was not involved in the process and never gave orders that it should be turned into his personal vacation villa.

This is the second time that Tam has been called by police. In April 2013, he was sentenced to three years in prison or five years of probation for creating a slush fund worth approximately 30 billion won.

The latest investigation comes as the confectionery giant is struggling to recover from the impact of Chinese economic retaliations to the deployment of the U.S.-led Terminal High Altitude Area Defense antimissile system last year.


BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]
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