"Inspection Ban, Serious Secondary Harm to Victims Due to Suspension of Major Case Investigations"

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[Asia Economy Reporter Kim Hyung-min] Victims of large-scale fund fraud have come out in opposition to the Democratic Party of Korea's ‘complete prosecution reform’ bill.

The ‘Daishin Securities Lime Fraud Victims Countermeasure Committee’ will hold a press conference at 2 p.m. on the 21st in front of the National Assembly building in Yeouido. In a statement distributed in advance, they said, "The complete prosecution reform will effectively halt ongoing investigations aimed at uncovering the truth behind large-scale fund fraud cases, causing serious secondary harm to the victims," and added, "Only the prosecutors in charge of the investigation, who have a keen understanding of the essence of the case through the investigation, can respond swiftly to fraud crimes." The Lime incident refers to the case in July 2019 when Lime Asset Management suspended redemptions, resulting in damages amounting to 1.6 trillion won. The countermeasure committee was formed by investors who suffered about 200 billion won in damages from Daishin Securities. The Lime case is currently being investigated by the Seoul Southern District Prosecutors' Office.

Prosecutors' investigators nationwide are preparing collective action. Investigators belonging to the Seoul High Prosecutors' Office will gather at 7 p.m. on the same day to discuss response measures. It is reported that investigators below grade 5 from eight district prosecutors' offices, including Seoul Central, Eastern, Southern, Northern, and Western District Prosecutors' Offices, will attend. Prior to this, investigators nationwide collected opinions through the prosecutors' internal network ‘Epross’. On the 18th, an investigator from the Supreme Prosecutors' Office posted a message titled ‘Please gather opinions on the complete prosecution reform bill,’ which received nearly 2,000 comments. Among investigators, the most common concern is the fear of losing their jobs if the reform is realized.

There is widespread analysis that if prosecutors lose their investigative authority, investigators will be hit even harder than prosecutors themselves, as they are responsible for the practical work of investigations. When the adjustment of investigative authority between prosecutors and police was discussed, there was a plan to transfer investigators to the Ministry of Justice Correction Headquarters or the National Police Agency, but it was postponed. If the complete prosecution reform is implemented, it is known that this plan may be reconsidered. The secretaries general of high prosecutors' offices nationwide also discussed the problems of the reform and the status and functions of investigators the day before. They stated, "If the status of investigators as judicial police officers is removed, it will result in the loss of authority to enforce criminal execution, causing significant obstacles to the exercise of national criminal punishment authority," and added, "The investigative know-how accumulated by investigators over 70 years will also be lost."

The law firm industry is monitoring the situation closely, although there has been no collective action or official statements regarding the reform. A lawyer in Seocho-dong said, "There is considerable dissatisfaction, especially among litigation lawyers." Litigation lawyers mainly prepare lawsuits and represent clients in court. They are reportedly particularly concerned about the rapidly changing litigation system and the resulting work stress if the complete prosecution reform is enacted.

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