Prosecution Indicts Former Taekwang Chairman Lee Hojin Without Detention on Embezzlement and Breach of Trust Charges

31 Billion Won Slush Fund Created Through False Salary Payments
Construction Costs Covered and Corporate Card Misused

Lee Ho-jin, former chairman of Taekwang Group, has been indicted on charges of embezzling tens of billions of won in company funds, including siphoning off employee salaries to create a slush fund.

According to the legal community on May 12, the Criminal Division 3 of the Seoul Central District Prosecutors' Office (headed by Kim Hokyung) indicted former Chairman Lee and former Management Council Chairman Kim Ki-yu without detention on May 8, on charges of embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.

Former Chairman Lee is accused of creating a slush fund by instructing group executives to falsify company records as if they were working at affiliates, paying them salaries, and then reclaiming the payments. Prosecutors found that this method of embezzlement continued for 15 years, from 2008 to 2023, and the slush fund thus accumulated amounted to 3.1 billion won.

The indictment also includes charges that Taekwang Group unfairly supported affiliates by covering about 600 million won in construction costs for the Taekwang Country Club golf practice range, which is owned by the group, and that Lee used about 80 million won in corporate credit card expenses for personal purposes, causing a total loss of about 700 million won to the company.

Previously, the police, who investigated the case, referred Lee to the prosecution in September 2024 on charges including embezzlement and breach of trust. Former Chairman Kim was also referred for prosecution, as the police determined he had conspired with Lee in the crimes.

The prosecution, after a supplementary investigation, indicted only on the charges for which sufficient evidence could be secured, excluding some allegations that were difficult to prove. Taekwang has argued that the alleged embezzlement and breach of trust are unrelated to former Chairman Lee. A Taekwang representative stated, "This case began when former Chairman Kim, who is being tried for a 15 billion won fraudulent loan, reported Lee to the police in an attempt to shift the blame for his own illegal conduct." The representative added, "The creation of the slush fund involved Kim paying double salaries to his own associates and reclaiming the money, and the golf practice range construction was also unrelated to Lee." The company further commented, "We will diligently clarify these facts during the upcoming trial process."