Prosecutors Seek First Detention of KDFS CEO in 'KT Preferential Contracting' Case (Comprehensive)
The prosecution investigating KT Group's 'suspicion of preferential treatment in work allocation' filed arrest warrants on the 10th for Hwang Wook-jung, CEO of subcontractor KDFS, and other related individuals.
This is the first time the prosecution has sought to secure custody of related parties since intensifying the investigation by raiding KT headquarters and others in May.
The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Jung-seop) filed an arrest warrant for CEO Hwang on charges including breach of trust, embezzlement, and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.
Arrest warrants were also filed against Hong (executive director) and Lee (department head) from KT Headquarters' Management Support Office, and Kim, former executive director of KT Telecop and current executive director of KDFS, on charges of violating the Fair Trade Act and accepting bribes related to breach of trust.
The prosecution found that in 2021, CEO Hwang requested Lee, Hong, Kim, and others to increase the volume of KDFS services and provided them with financial benefits. From 2017 to this year, they are also suspected of embezzling tens of billions of won from KDFS funds by listing their children as nominal employees or paying false consulting fees.
Following CEO Hwang's request, Lee and others reportedly drastically reduced the service volume of another subcontractor, KFnS, ignoring previous contract terms. The prosecution stated in the arrest warrant that Lee and others, who complied with the request, received corporate cards, shared office spaces, and employment opportunities for their families from KDFS from 2020 to this year.
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The prosecution is focusing on the fact that this preferential work allocation occurred after former CEO Koo Kun-mo took office in 2020 and is expanding the investigation into possible involvement of higher-ups within KT. After former CEO Koo's appointment, KT changed the work order contractor from KT Estate to KT Telecop. Subsequently, KT Telecop is suspected of concentrating work orders, which were previously divided among four subcontractors?KDFS, KSmate, KFnS, and KSNC?onto KDFS.
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