Sajeongbaram Shuts Up... Companies Uneasy with Changed Prosecution Service

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyung-min] Recently, the business community has been on edge due to the prosecution's movements. With the prosecution launching a forced investigation against Samsung and the revival of the Securities Crime Joint Investigation Unit, known as the "Yeouido Grim Reaper," attention is focused on where the investigative blade will be directed.

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Ko Jin-won) conducted a search and seizure on the 28th at Samsung Electronics headquarters in Yeongtong-gu, Suwon-si, Gyeonggi Province, and Samsung Welstory headquarters in Bundang-gu, Seongnam-si. This came nine months after the Fair Trade Commission filed a complaint with the prosecution.

Legal circles believe that the prosecution may not stop at allegations of unfair support among affiliates but could also touch on the issue of Samsung Electronics Vice Chairman Lee Jae-yong's succession of management rights. The Fair Trade Investigation Division has received six additional prosecutors and increased its investigation teams from two to three. Four prosecutors, including one deputy chief prosecutor and three regular prosecutors, were seconded from the departments under the First and Third Chief Prosecutors. Including two prosecutors from the Anti-Corruption and Strong Investigation Division 2, who were deployed in mid-last month, the total number has increased from nine to fifteen. The division is composed of Fair Trade Investigation Teams 1 and 2, and the Unfair Support Investigation Team. Some suggest that pro-government prosecutors have expanded corporate investigations to demonstrate their presence to the new administration.

If the Financial and Securities Crime Investigation Cooperation Unit established at the Seoul Southern District Prosecutors' Office becomes a formal organization, it is expected to play a role similar to the former Securities Crime Joint Investigation Unit. In 2013, the prosecution created the Joint Investigation Unit, a non-regular organization, to handle various financial crimes, specializing in financial and securities crimes. The unit has uncovered nearly 1,000 violators of the Capital Markets Act and brought them to trial. It was abolished in January 2020 shortly after former Minister of Justice Choo Mi-ae took office, being labeled a "hotbed of corruption," but was revived last September in the form of a cooperation unit.

The cooperation unit was formed to respond to various financial and securities crimes, including market manipulation and unfair trading in capital markets. Led by Director Park Sung-hoon (age 50, Judicial Research and Training Institute class 31), a certified public accountant, the unit consists of a large-scale team of 46 members (5 prosecutors, 29 prosecution staff, and 12 affiliated agency personnel) with specialized investigative capabilities in financial and securities crimes, including prosecutors, special judicial police, and experts in the financial and securities fields.

The prosecutors in the cooperation unit all have expertise in finance and securities, having been dispatched to the Financial Intelligence Unit (FIU) or served as senior prosecutors in the Financial Investigation Departments 1 and 2 of the Seoul Southern District Prosecutors' Office. The prosecution investigators are also specialized personnel with experience working in the Securities Crime Joint Investigation Unit, the Financial Investigation Department, and the Central District Prosecutors' Office Special Division, with more than half having investigative experience in the Securities Crime Joint Investigation Unit or the Financial Investigation Department. Shortly after its launch, the unit conducted search and seizure operations at Hana Financial Investment offices and the residences of former representatives, who are suspected of "front-running" and other allegations.

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