Prosecutors Raid Daewoo Industrial Development... Hundreds of Billions in Accounting Fraud Allegations (Comprehensive Report 2)

The Tax Crime Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Min Kyung-ho) launched a forced investigation on the 13th into former and current executives of Daewoo Industrial Development, who are accused of accounting fraud involving hundreds of billions of won.

Daewoo Industrial Development Photo by Yonhap News

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The prosecution is investigating Chairman Lee Sang-young and former CEO Han Jae-jun of the company on charges of embezzlement, breach of trust, and accounting fraud. Prosecutors and investigators have been dispatched to 10 locations, including the headquarters in Yeonsu-gu, Incheon, the Seoul office in Jung-gu, Seoul, and the residences of the two individuals, to secure accounting documents and other evidence.

Earlier, the civic group Committee for the Protection of the Common People's Livelihoods filed a police complaint in January last year against Chairman Lee, former CEO Han, and financial officers for violations of the External Audit Act, alleging accounting fraud amounting to around 100 billion won. Following the investigation, the police transferred former CEO Han and one financial officer to the prosecution.

The prosecution, conducting additional investigations, believes that Chairman Lee and former CEO Han committed large-scale embezzlement and breach of trust during the process of accounting fraud involving hundreds of billions of won, and thus initiated a forced investigation.

Regarding the search and seizure conducted on the day, Daewoo Industrial Development issued a statement saying, "Despite having no facts of accounting fraud, we are undergoing another search and seizure by the prosecution, causing serious difficulties in conducting company operations." The company explained, "The police judged there was no accounting fraud and did not refer the case for prosecution, and in February, the court dismissed the arrest warrant for embezzlement and breach of trust charges."

Meanwhile, the Corruption Investigation Office for High-ranking Officials (CIO) is also investigating related cases. Chairman Lee is accused of promising to pay 300 million won to Kim, a police superintendent who was working at the Gangwon Police Agency at the time, in exchange for quashing the investigation, after the Seoul Metropolitan Police Agency’s Financial Crime Investigation Unit conducted a search and seizure in April last year to intensify the investigation.

The CIO has registered Superintendent Kim and A, a sergeant from the Financial Crime Investigation Unit who was identified as the person to whom the case request was made, as suspects and is currently investigating them.

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