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Residences raided in probe on fishy investment

Sept 11,2019
Prosecutors on Tuesday raided the residences of Justice Minister Cho Kuk’s brother’s ex-wife and the CEO of a company Cho’s family invested in, adding momentum to a probe into alleged irregularities involving one of the president’s most trusted aides.

The additional raids were carried out a day after President Moon Jae-in formally appointed Cho as his justice minister despite an ongoing investigation by the Seoul Central District Prosecutors’ Office, which criminally indicted Cho’s wife last Friday for allegedly forging an award to help her daughter get into medical school.

The daughter currently attends Pusan National University’s Graduate School of Medicine in Yangsan, South Gyeongsang.

Cho’s brother’s ex-wife, who works as a deputy director for a major Korean airline company, faces allegations she conspired with Cho’s wife in violating real estate laws and faking her own divorce with Cho’s brother to evade paying taxes.

The ex-wife denied the allegations in a statement released to the local press last month.

The other person whose house was raided on Tuesday was a 54-year-old surnamed Choi, CEO of Wellscnt.

Choi was among two businessmen prosecutors filed a pre-trial detention warrant for on Monday. The other person was Lee Sang-hoon, 40, CEO of Co-Link Private Equity (PE). They both are linked to suspicious investments made by Cho’s family.

Cho’s family invested 1.05 billion won ($880,000) in a private equity fund named Blue Core Value-Up 1, which was managed by the company PE. Of that amount, 950 million won was invested in the name of Cho’s wife and 50 million won was invested in the names of each his son and daughter.

Blue Core Value-Up 1’s total capital was 1.4 billion won, including investments from Cho’s brother-in-law and two nephews, which is why prosecutors see the private equity fund as basically being owned by the Cho’s family.

In August 2017, Blue Core Value-Up 1 invested 1.38 billion won in a tiny company called Wellscnt, which produces streetlamp control systems, becoming the largest shareholder.

Soon after, Wellscnt’s performance started to take off as it landed deals with numerous local government offices and public companies.

Prosecutors are trying to figure out whether Cho, who worked as the presidential senior secretary for civil affairs from May 2017 to July 2019, pulled strings to help Wellscnt win contracts to the benefit of his family.

An executive at Wellscnt and the chairman of Iksung, a subcontractor of Hyundai Motor, were both summoned for questioning on Tuesday. Prosecutors believe Iksung financed the establishment of PE. Iksung’s chairman is believed to be close to Cho’s first cousin once removed, a 36-year-old man who is also surnamed Cho.

The first cousin once removed, who is suspected to be PE’s actual owner, fled to the Philippines last month after the justice minister’s scandal arose and has yet to return.

BY LEE SUNG-EUN, HAN YOUNG-HYE AND PARK TAE-IN [lee.sungeun@joongang.co.kr]