'Arrest Warrant to Be Requested for Ostem Employee in 188 Billion Embezzlement Case... Two More Officials Under Investigation'

Investigation Likely on Embezzled Funds' Whereabouts and Accomplice Status During Detention
Possibility of Inquiry into Chairman Choi Kyu-ok of Civic Group Also Considered

[Image source=Yonhap News]

[Asia Economy Reporters Ji Yeon-jin and Yoo Byung-don] The police will apply for an arrest warrant on the 7th for Lee Mo (45), the head of the finance management team at Osstem Implant, who embezzled 188 billion KRW of company funds. Accordingly, the investigation into the remaining funds and the involvement of accomplices is expected to accelerate. An investigation into Osstem Implant Chairman Choi Gyu-ok and other executives, who were reported by civic groups, is also anticipated.

The Gangseo Police Station in Seoul stated, "We plan to apply for an arrest warrant for Osstem Implant employee Lee, who is suspected of embezzlement in the course of duty (violation of the Act on the Aggravated Punishment of Specific Economic Crimes)." According to the Criminal Procedure Act, investigative agencies must apply for or request an arrest warrant within 48 hours after detaining a suspect and obtain court approval to detain or release them. More than half of the embezzled amount has not yet been recovered, and there is a high possibility of arrest due to concerns about flight risk.

The police are reportedly investigating two more individuals besides Lee in connection with this case. Their identities and involvement in the crime have not been disclosed in detail.

When Lee was arrested on the afternoon of the 5th, the police seized gold bars worth approximately 30 billion KRW from his home and froze his securities account containing 25 billion KRW the following day. The police are focusing their investigative efforts on recovering the remaining approximately 400 gold bars purchased last month and other assets estimated to be worth around 100 billion KRW.

It is understood that Lee purchased 143 billion KRW worth of Dongjin Semichem stocks, a KOSDAQ-listed company, in October last year, and sold most of them in November and December, securing about 111.2 billion KRW in cash. Just before disappearing on the 30th of last month, he gifted three real estate properties, including a building in Mokdong-dong, Paju-si, Gyeonggi Province, where he was hiding, to family and acquaintances, and canceled tens of billions of KRW in mortgages. However, since the timing of ownership acquisition of the gifted properties coincides with the period of embezzlement, it is difficult to prematurely judge the possibility of recovery.

The police are also examining the possibility of accomplices as claimed by Lee. Lee's lawyer explained to reporters on the 6th when asked about accomplice suspicions, "It is not certain, but there are such suspicions," adding, "It seems that Lee had been receiving such work instructions from higher-ups." Osstem Implant stated, "There was no involvement from higher-ups. The claim that the embezzling employee testified about the chairman is entirely false," and added, "This is a clear false allegation aimed at hiding the stolen gold bars and obstructing the investigation."

However, regardless of the claims by Lee or Osstem Implant, the police are conducting the investigation with the possibility of accomplices in mind. Although Lee was the person responsible for financial management, it is believed that it would have been difficult to embezzle nearly 200 billion KRW alone.

The police are not ruling out the possibility that Osstem Implant Chairman Choi Gyu-ok, mentioned by Lee during the investigation, was involved. There have been ongoing discussions within the company and the market about the chairman's possible involvement. Additionally, since the civic group Seomin Minsaeng Countermeasure Committee filed a complaint with the National Police Agency's National Investigation Headquarters against Chairman Choi and CEO Eom Tae-gwan for embezzlement and violation of the Capital Markets Act (price manipulation), there is room for investigation. The police will continue to investigate Lee while he is in custody and may conduct a search and seizure of Osstem Implant if necessary. There is also a possibility that Chairman Choi, suspected of giving direct orders, will be summoned as a witness for questioning.

Meanwhile, the damage to Osstem Implant investors is expected to spread. As of the end of last year, there were 19,856 small shareholders. Including Exchange-Traded Fund (ETF) investors, the number of investors is even larger. According to financial information company FnGuide, as of the end of the third quarter last year, there were 106 domestic funds holding Osstem Implant.

The Financial Supervisory Service requested about 70 domestic asset management companies on the same day to submit information on funds including Osstem Implant and the number of subscribers. A Financial Supervisory Service official said, "We requested data on funds including Osstem Implant from asset management companies," adding, "Once we receive the data, we will verify and aggregate the contents to assess the scale of the damage."

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