Speeding Corporate Case Investigations... Seoul Southern District Prosecutors' Office Is Busy

Published 18 Nov.2024 14:03(KST)

As one criminal defense lawyer put it, "It seems that 80% of corporate cases these days are handled by the Seoul Southern District Prosecutors' Office," which is accelerating investigations into major corporate cases. Investigations are in full swing into allegations such as Kakao Mobility's call-rigging suspicions, LG Welfare Foundation Chairperson Gu Yeon-gyeong's use of undisclosed information, and former Woori Financial Group Chairman Sohn Tae-seung's relatives' improper loans.

Legal Newspaper

Search and Seizure of Kakao Mobility and Kakao

The Financial Investigation Division 2 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Jang Dae-gyu) conducted a search and seizure on Kakao and Kakao Mobility on the 11th on suspicion of violating the Fair Trade Act. This was the fifth search and seizure following four days of searches from the 5th to the 8th. The investigation is progressing rapidly as it involves a case assigned earlier this year that required compulsory investigation.

Kakao Mobility is suspected of excluding competitors by funneling calls exclusively to its franchise taxi service, Kakao T Blue, while blocking calls to competitor franchise taxis. Last year, the Fair Trade Commission imposed a fine of 27.1 billion KRW for call-rigging, and last month, a fine of 72.4 billion KRW along with corrective orders for call blocking.

The search and seizure also included Kakao's headquarters, which is analyzed as an attempt to verify the connection between Kakao Mobility's allegations and the headquarters. Chief Prosecutor Jang Dae-gyu, who is handling the case, previously led the arrest investigation of Kim Beom-su, Chairman of the Management Innovation Committee, in the SM Entertainment stock price manipulation case involving Kakao.

Chairman Kim appeared at the first trial for charges of violating the Capital Markets Act after being released on bail on the 15th, stating, "I will sincerely participate in the trial." He was detained on July 23 and released on bail on the 31st of last month.

The prosecution has appealed the bail decision for Chairman Kim on the 6th. The prosecution cited reasons including: the expectation of a heavy sentence raising flight risk; no witness examination having been conducted, raising the possibility of evidence tampering through witness coaching; the detention period being only three months; and the unusual short-term release without any change in circumstances after detention.

Analysis of Seized Items from Chairperson Gu Yeon-gyeong

The Joint Financial and Securities Crime Investigation Division (Chief Prosecutor Gong Jun-hyeok) is investigating allegations that Gu Yeon-gyeong, Chairperson of the LG Welfare Foundation, and her husband Yoon Kwan, CEO of Blue Run Ventures (BRV), engaged in stock trading using undisclosed material information. The investigation team is analyzing materials secured from searches of Gu's residence and the LG Welfare Foundation office conducted on the 30th of last month.

It is known that the couple has retained the law firm Yulwoo for their defense. Yulwoo also represents Gu and others, including Kim Young-sik and Gu Yeon-su, in the LG Group inheritance property dispute.

This case began with allegations that Gu used undisclosed information last year to acquire 30,000 shares of the bio company Mezzion. In April of last year, Mezzion received a 50 billion KRW investment through a third-party allotment paid-in capital increase from BRV Capital Management, where Yoon serves as CEO. The Financial Services Commission's Securities and Futures Commission notified the prosecution of these allegations on the 2nd, and civic groups have also filed related complaints with the prosecution.

The Financial Investigation Division 1 (Chief Prosecutor Kim Su-hong) is investigating allegations of improper loans to relatives of former Woori Financial Group Chairman Sohn Tae-seung. On the 31st of last month, former Woori Bank Deputy Head Seong Mo was arrested on charges of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and the investigation is expanding to include higher-ups such as former Chairman Sohn. On September 24, the prosecution indicted Sohn's brother-in-law Kim on charges including embezzlement and forgery of private documents under the same law. The prosecution is focusing on whether former Chairman Sohn and other executives at the time were involved in improper loans amounting to approximately 35 billion KRW. Additionally, the prosecution is examining personal corruption allegations against former Chairman Sohn. Earlier, the prosecution took over an investigation from the Financial Supervisory Service, which found that Woori Bank had made improper loans to Sohn's relatives from April 2020 to January this year, and has begun its own investigation.