Executives Embezzle Funds to Transfer Management Rights of Listed Company... Prosecution Indicts and Detains
by Oh Kuemin
Published 27 Apr.2022 13:44(KST)
Embezzlement of Approximately 12.5 Billion Won from Paid-in Capital Increase
Also Illegally Gained 8.5 Billion Won in Profits
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[Asia Economy Reporter Oh Gyumin] The prosecution has arrested and indicted executives who embezzled company funds to transfer their management rights.
On the 27th, the Financial and Securities Crime Investigation Cooperation Team (Head Park Seonghoon) of the Seoul Southern District Prosecutors' Office indicted A (60), CEO and major shareholder of a KOSDAQ-listed company, and M&A broker B (63) on charges of violating the Capital Markets Act (fraudulent unfair trading and use of insider information), among others.
They were charged with embezzling 12.58 billion KRW out of 25.6 billion KRW in paid-in capital from C Company, a KOSDAQ-listed company, in September 2017, and transferring A's shares and management rights of C Company to D Company.
According to the prosecution, they committed the crime by falsely disclosing that the paid-in capital of C Company was properly loaned to a subsidiary and acquiring D Company through this method.
A is also accused of gaining an unfair profit of about 8.5 billion KRW from the stock transfer payment and, in February 2019, obtaining undisclosed information about the auditor's refusal of opinion in advance, then selling 84,000 shares of C Company held under his wife's name to avoid a loss of 12 million KRW.
Additionally, from September 2017 to March 2018, they are accused of causing losses to C Company by lending 14.18 billion KRW of C Company's funds to other companies without reviewing recoverability or setting collateral rights and investing 5.6 billion KRW in an investment association.
The prosecution stated, "C Company was delisted on April 10, 2020, and is currently closed, and D Company was also delisted on October 11, 2018, causing huge damages to the general shareholders of both companies. We will strictly punish those who disrupt the capital market order and strive to establish financial order."
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