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Special probe begins into DAS slush fund

Dec 28,2017
A special investigation team launched a probe on Tuesday into whether former President Lee Myung-bak created 12 billion won ($11.16 million) in slush funds using an automobile parts supplier named DAS.

The probe comes after a request to look into the allegations was made on Dec. 7 by the People’s Solidarity for Participatory Democracy and Lawyers for a Democratic Society.

In April 2001, an offshore investment fund named BBK lost its operating license for forging investment reports. DAS was the biggest investor in BBK and its largest shareholders were the former president’s elder brother Lee Sang-eun and his brother-in-law, Kim Jae-jung. In addition, the former president himself was alleged to have secretly owned both DAS and BBK.

The two civic groups urged the prosecution to look into whether Lee Sang-eun and an unidentified DAS owner, possibly the former president, embezzled DAS funds and evaded taxes. The civic groups also urged the prosecution to look into Chung Ho-young, an independent counsel who in 2008 investigated Lee for the BBK investment fraud scandal, but ended the probe and declared Lee innocent just days before the election.

Chung also concluded that an accounting clerk at DAS embezzled 12 billion won, but civic groups argue that the money was stolen to create slush funds.

The Supreme Public Prosecutors’ Office formed the special investigation team, led by Moon Chan-seok, at the Seoul Eastern District Prosecutors’ Office on Friday to investigate these allegations. According to Moon, “The focus of our investigation is whether the 12 billion won was embezzled by an individual or diverted by the company to create slush funds.”

The prosecution only has two months to do so, since Chung announced the conclusion of his probe on Feb. 21, 2008, which means the 10-year statute of limitations expires on Feb. 21, 2018.

But Moon made clear that the probe is not aimed at identifying the actual owner of DAS. “That is being investigated by the Seoul Central District Prosecutors’ Office,” he said.

A separate but related investigation is currently taking place on another scandal involving Lee and DAS. Lee’s former business partner, Kim Kyung-joon, established BBK in 1999 and in 2011, the company paid DAS 14 billion won to return investments into the failed venture.

Lee is accused of abusing his power as president to collect DAS’s investment from BBK before small private investors retrieved their money through a civil suit. A unit headed by senior prosecutor Shin Bong-su, who investigated the BBK scandal in 2008, is investigating the case.

BY SER MYO-JA [ser.myoja@joongang.co.kr]