[2020 National Audit] Former Head of the Korea Radio Promotion Agency on the Optimus Scandal: "I Didn't Know, No Investment Pressure"

[Asia Economy Reporter Seulgi Na Jo] Former director Seo Seok-jin, who was the head of the Korea Communications Agency at the time of the 100 billion won-scale Optimus fund investment, testified that he "was unaware because he did not participate in the investment decision" and that "there was no external pressure or lobbying regarding the investment."

On the afternoon of the 22nd, Seo, who appeared as a witness at the National Assembly Science, Technology, Information and Broadcasting and Communications Committee (STIBC) comprehensive audit, said, "The director does not get involved in individual investments, so I was unaware (at the time of the investment)," adding, "I learned about Optimus during the Ministry of Science and ICT audit in 2018." He also drew a clear line on whether he had met with former Optimus alternative investment division head Jung Young-je, known as a 'signboard lobbyist,' who was confirmed to have lobbied the Korea Communications Agency to receive funding, saying, "There was absolutely no such meeting."

The Korea Communications Agency invested a total of 106 billion won in 13 installments from June 2017 to March 2018 in the fund, the predecessor of Optimus Asset Management. Notably, 67 billion won of the total investment amount flowed into the currently problematic insolvent companies. Seo was the director at the time when the Optimus investment was led by former fund management headquarters chief Choi Nam-yong.

When asked whether there was any external pressure or lobbying at the time of the investment, Seo stated, "I think there was none." Regarding lobbying related to former chief Choi, he also expressed his view, "I believe there was none, based on circumstantial evidence."

However, he bowed his head, saying, "Even if I was not directly involved in individual investments, I believe I have the responsibility as the head representing the entire organization," adding, "I feel sorry about that part." The damage scale caused by the Optimus incident is confirmed to be over 1,000 people and more than 500 billion won.

In response to Rep. Hwang Bo-seung-hee of the People Power Party's question, "Could the incident have been prevented in advance?" Seo replied, "I think there was an opportunity to prevent it," adding, "I believe the supervisory functions of the sales company, custodian bank, and Korea Securities Depository were all collapsed at the time within the investment mechanism. If these three institutions had only cross-checked, such a fraud could not have been established." He added, "From our (Korea Communications Agency) perspective, it was a mistake not to recognize that the financial supervisory system had simultaneously failed."

Regarding measures to prevent recurrence, he said, "It was a loophole created when regulations were relaxed in 2015 to revitalize funds, which was exploited by financial fraud. It seems the mandatory cross-checking provisions among the sales company, custodian bank, and Korea Securities Depository were omitted. I believe the authorities will supplement this," adding, "From the perspective of institutions and investors, there is a question of whether investment risk management should cover situations where the financial supervisory function is completely broken. I ask the lawmakers to carefully consider and judge this."

The comprehensive audit on this day focused criticism on the Optimus fund incident, mainly from the opposition party, from the start. There were continuous voices criticizing that the public institution Korea Communications Agency became the stepping stone for a public fund.

Rep. Hwang Bo-seung-hee said, "Investments by public institutions can have a significant impact on private investors, so they must be more cautious. The amount exceeded 100 billion won, and 67 billion won of that was invested in insolvent companies," and argued, "A special prosecutor should be introduced to clearly reveal the truth." In response, Minister of Science and ICT Choi Ki-young replied, "We will cooperate sincerely." Regarding whether former Korea Communications Agency director Jeong Han-geun received the Optimus handover from former director Seo Seok-jin or recent contacts from the National Assembly or the Blue House, he said, "I have not received anything special."

Rep. Park Dae-chul of the People Power Party criticized that the public institution Korea Communications Agency, by leading the Optimus investment, sent the wrong signal to individual investors. He said, "On the 13th, the Korea Communications Agency stated through submitted materials that it invested 67 billion won in six cases, but after reports emerged that a total of 106 billion won was invested in 13 cases, they submitted materials again two days later confirming the 106 billion won investment," raising suspicions of concealment of investment scale. Rep. Jeong Hee-yong of the People Power Party also referred to the same materials, claiming, "The number of investments and the entire period do not match. The director submitted false materials and gave false testimony at the audit."

In response, Director Jeong Han-geun said, "It is difficult to know the detailed investment history in asset management. We reviewed daily reports to see where the investments were made, but it was later confirmed that false materials were submitted, which led to a request for a prosecution investigation on that part."

Former fund management headquarters chief Choi Nam-yong, involved in the Optimus fund incident, was selected as a reference witness but did not appear at the testimony stand, submitting a non-attendance letter stating, "I am subject to investigation by the Seoul Central District Prosecutors' Office regarding the Optimus fund investment case and therefore cannot attend." It has been confirmed that Choi maintained a close relationship with the Optimus management, even traveling abroad with their families at the time when the investment in the Optimus fund began during his tenure as fund management headquarters chief, raising suspicions of collusion. Choi received a reprimand in September 2018 related to the approval of the 67 billion won fund investment.

This content was produced with the assistance of AI translation services.