Company Head Who Diverted 360 Million Won in Loans Indicted After Supplementary Prosecutors' Investigation

Police Twice Declined to Refer Case
Busan District Prosecutors' Office Dongbu Branch Conducts Supplementary Investigation and Sends Case to Trial

The Busan District Prosecutors' Office Dongbu Branch announced on September 8 that it had conducted a supplementary investigation into a case that the police had decided not to refer for prosecution despite a request for reinvestigation. As a result, five individuals, including the head of a company who received fraudulent loans from a bank, have been indicted on charges of fraud.

According to the prosecution, Mr. A, the head of a heavy industry company, conspired with the heads of four other companies, including a materials supplier, to issue false tax invoices from November 2016 to May 2017. They are accused of using these false invoices to fraudulently obtain a loan of approximately 360 million won from Industrial Bank of Korea. In order to utilize the bank's "corporate purchase fund loan program," they issued false invoices, received the loan, and then canceled the tax invoices.

This case came to light when the Korea Credit Guarantee Fund, which was responsible for guaranteeing the loan, became aware of the situation and filed a complaint with the police against Mr. A and others in September of last year. However, in January of this year, the police decided not to refer the case to the prosecution.

An official from the Dongbu Branch stated, "Some of the suspects admitted to issuing false tax invoices for the purpose of repaying outstanding debts, but the police decided not to refer the case, citing the difficulty of collecting evidence due to the companies already having closed down." The prosecution submitted precedents in which guilty verdicts had been handed down in similar cases and requested a reinvestigation from the police in March of this year, but the police again decided not to refer the case in June.

In response, the prosecution requested the transfer of the case in July of this year, conducted interviews with the suspects, and carried out supplementary investigations, including accounting analysis and tracking the flow of funds. As a result, the five individuals were indicted. An official from the Dongbu Branch added, "The prosecution directly questioned those involved and analyzed financial transactions, identifying and indicting an additional participant who was not included in the original complaint. This is an example of a supplementary investigation leading to strict prosecution of crimes that undermine national finances and the financial system, as the Korea Credit Guarantee Fund, which is based on public funds, had to make substitute payments for the loans."

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