+ A

Prosecutors find ‘smoking gun’ in DAS scandal

Former MB confidant gives clue to identify company’s true owner
Feb 21,2018
The prosecution has obtained a “smoking gun” statement proving that former President Lee Myung-bak is the actual owner of an auto company standing at the center of various corruption allegations, the JoongAng Ilbo reported Tuesday.

One of Lee’s confidants told the prosecution during a recent interrogation that he has managed the former president’s secret wealth, sources from the legal community told the JoongAng Ilbo on Monday.

Lee Byung-mo, a senior official of the Cheonggye Foundation, was detained last week on charges of destroying evidence. He was arrested for shredding documents pertaining to the former president’s assets and financial transactions.

Lee Byung-mo, who has worked for the former president’s family for years, is known to be their money manager.

According to sources, Lee Byung-mo told the prosecution that he directly reported to the former president about changes of assets until recently. The secret wealth included a piece of land in Dogok-dong, southern Seoul, which holds the key to identifying the true owner of DAS, an auto parts maker linked to a series of corruption scandals.

The former president’s elder brother, Lee Sang-eun, is listed as the owner of DAS. He became the owner by purchasing the largest stake of the firm with money raised by selling the land in Dogok-dong. If the land had actually belonged to the former president, then he should be seen as the actual owner of DAS, the prosecution concluded, according to sources.

The land, co-owned by Lee Sang-eun and Kim Jae-jung, the late brother-in-law of the former president, was sold at 26.3 billion won ($24.5 million) in 1993. Lee Sang-eun raised about 15.7 billion won from the deal and used the proceeds to purchase stakes in DAS to become its largest shareholder.

When DAS’s ownership was first investigated in January 2008 by an independent counsel, Lee Byung-mo held a press conference and said the Dogok-dong land had nothing to do with Lee Myung-bak, who was the president-elect at the time. But it was a premeditated lie, the prosecution learned.

According to sources, Lee Myung-bak and his campaign officials planned the media conference to obstruct the independent counsel probe.

The former president has long denied that he owns secret wealth and has insisted that the ongoing prosecution’s investigation into his aides and family are a form of “political vendetta” by the Moon Jae-in administration.

But if Lee is identified as DAS’s actual owner, the prosecution will likely apply a bribery charge against him. As of now, the prosecution is investigating an allegation that Samsung Group paid an expensive legal bill on behalf of DAS for its lawsuit in the United States, in return for the presidential pardon of its chairman, Lee Kun-hee, in 2009.

“It is the official position of the former president that he has nothing to do with the Dogok-dong land,” an aide to Lee said. “Lee Byung-mo probably gave that statement to avoid any charges against him.”

Another confidant of the former president, who had managed his secret assets, was also detained on Tuesday. The Seoul Central District Court granted the prosecution a warrant to detain Lee Young-bae, who heads DAS’s subcontractor, Kumgang, on the grounds that he is a flight risk and the possibility of evidence destruction.

The prosecution had said Lee Young-bae is a suspect of embezzlement and breach of trust. He was accused of creating slush funds worth at least 6.5 billion won through the company. He was also accused of embezzling 1.1 billion won by falsifying salary records as if the firm had paid the money to Kwon Young-mi, the wife of the former president’s late brother-in-law.

He was also accused of incurring losses to the company by allowing a loan of 1.6 billion won to a company owned by the former president’s son at an extremely low interest rate.

Lee Young-bae was suspected as the initial money manager of the former president, when the prosecution and the independent counsel conducted probes in 2007 and 2008. He started working for the Lee family in 1983 and played a key role in establishing DAS.

The prosecution suspected that he managed properties the former president owns under third parties’ names.

After he became the head of Kumgang in 2003, Lee Byung-mo took over the duty of secret asset manager. The prosecution suspects that he visited the Blue House during Lee’s presidency to give face-to-face briefings on the assets changes.

After the Cheonggye Foundation was set up in 2009 to fulfill Lee’s campaign pledge to return his wealth to society, Lee Byung-mo was appointed as the executive-secretary of the scholarship fund.

By SER MYO-JA, YOON HO-JIN and JUNG JIN-WOO [ser.myoja@joongang.co.kr]