Explanation Post on Internal Network After Yesterday's Comprehensive Audit Regarding Last Year's 'No Charges' Disposition
"Not a Case Requested for Investigation by Optimus Victims"... "Not Reported to Prosecutor General or First Deputy"
"Disposition Made in 3 Months Excluding 4-Month Investigation Supervision Period... Not a Violation of Approval Regulations"
Minister of Justice Choo Mi-ae (left) and Prosecutor General Yoon Seok-yeol. [Image source=Yonhap News]
[Asia Economy Reporter Choi Seok-jin] Kim Yu-cheol, Chief of the Wonju Branch of Chuncheon District Prosecutors' Office (age 51, Judicial Research and Training Institute class 29), who was responsible for the investigation as the head of the Criminal Division 7 at Seoul Central District Prosecutors' Office last year, directly refuted the controversy over the "Optimus-related case dismissal" during the National Assembly audit, stating that it was "not a sloppy or downplayed investigation."
Kim also drew a clear line regarding whether he reported to Yoon Seok-yeol, then head of Seoul Central District Prosecutors' Office and now Prosecutor General, and about lawyer Lee Gyu-cheol, who was the defense attorney for Optimus, stating, "Neither I nor the lead prosecutor met or communicated with this lawyer, nor did we report to or receive instructions from the then chief prosecutor or first deputy chief prosecutor regarding this case."
With Justice Minister Choo Mi-ae announcing an inspection of Prosecutor General Yoon regarding these allegations during the audit, and Kim himself providing a detailed explanation, it is expected that many of the raised suspicions will be resolved.
According to the legal community on the 27th, Kim posted a statement titled "Optimus Asset Management Related Investigation Request Case" on the internal prosecution network e-Pros immediately after the comprehensive audit of the Ministry of Justice by the National Assembly's Legislation and Judiciary Committee concluded the previous day.
In the three-page A4 statement, Kim explained in detail the background of the investigation request, the case handling process, and the reasons for the "no charges" disposition. He also addressed allegations raised during the recent audit, including ▲ sloppy or downplayed investigation ▲ violation of delegated authority regulations ▲ inadequate notification of non-prosecution reasons.
Kim first explained the reason for writing the post, saying, "During the comprehensive audit by the Legislation and Judiciary Committee, the Optimus Asset Management-related investigation request case, which I approved while serving as head of the Criminal Division 7 at Seoul Central District Prosecutors' Office, was mentioned, so I want to clarify the facts accurately."
He added, "I am posting this after confirming the conclusion of the audit and have made efforts to comply with the 'Regulations on the Prohibition of Disclosure of Criminal Cases'."
Investigation Request by Korea Radio Promotion Association, Not Victims Based on 'Complaints'... Supplementary Investigation Directed by Prosecutor
Kim stated, "The case handled by the Criminal Division 7 at that time was not a case where 'Optimus victims' requested an investigation," and explained, "Mr. A, the former owner involved in a management dispute with the Optimus fund, filed a complaint with the Ministry of Science and ICT, the supervisory agency of the Korea Radio Promotion Association. Following the Ministry's instructions, the Radio Promotion Association requested an investigation."
He continued, "Although the Radio Promotion Association recovered all invested principal and interest without damage, the main content of the investigation request was that 'public funds were invested but were used to acquire a failing company like Seongji Construction. There is concern about investor damage, so please investigate.'
Due to this situation, the case was assigned a manual number instead of a sibling number and allocated to the Criminal Division 7, with a deputy chief prosecutor designated as the lead prosecutor and instructions sent to the investigation department."
Kim explained, "According to the statements of two officials from the audit office of the Radio Promotion Association, who were investigated by the investigation department's officers, the scope of the investigation request was the suspicion that Optimus embezzled the Radio Promotion Association's investment funds and violated commercial law by fictitious payment for new shares of Seongji Construction," adding, "They stated that they were not aware of other allegations."
Kim mentioned that supplementary investigations were conducted under the prosecutor's direction, refuting allegations of sloppy investigation.
He said, "Mr. A also filed a complaint with the police, and the Gangnam Police Station investigated, but it was confirmed that the case was dismissed due to withdrawal of the complaint. In December 2018, the investigation officer recommended dismissal, but the prosecutor directed supplementary investigation, instructing to investigate the investment background of fund money and the capital input into Seongji Construction before receiving further instructions."
He emphasized, "Following the instructions, the investigation department questioned suspects and related persons and sent the case with a 'no charges' opinion in February 2019, and the Criminal Division 7 issued a 'no charges' disposition on May 22 of the same year."
Kim also added, "In a situation where testimonies about whether Seongji Construction was a failing company conflicted between the investigation requester and some suspects, we confirmed that Seoul Southern District Prosecutors' Office was conducting a related investigation and recorded it in the investigation report."
He stressed, "Since the investigation request was not based on investigations by professional institutions such as the Financial Supervisory Service, and considering the dismissal of the same case by the police and statements from Radio Promotion Association employees, it was understood as a complaint case arising from internal disputes among asset management company officials. However, the prosecutor directed supplementary investigation, and after referral, it was confirmed that related investigations were ongoing at other offices."
"Not a Sloppy or Downplayed Investigation... Judged Not to Warrant Compulsory Investigation"
Regarding the reason for the "no charges" disposition, Kim explained, "In the case of embezzlement, the investment funds were used according to the asset management company's investment plan within the scope not violating the investment proposal, and there was no financial loss to the Radio Promotion Association, making it difficult to recognize the charges. Regarding fictitious payment, there was no clear evidence other than the Radio Promotion Association's statements."
He refuted the criticism of "sloppy or downplayed investigation" raised during the audit, saying, "Even if all allegations in the investigation request were not investigated or the facts in the non-prosecution decision were somewhat reduced compared to the investigation request, if the scope was confirmed through investigation of the requester and all were investigated and judged accordingly, it is not 'sloppy or omitted'."
He added, "Also, since the requester was passive and especially stated that 'there was no problem according to internal and Financial Supervisory Service investigations' and 'I do not know the exact allegations in the investigation request,' it was difficult for the investigation or criminal division to allocate large investigative resources."
Regarding why compulsory investigations such as account tracing or search and seizure were not conducted, Kim said, "Given the unclear statements of the requester and lack of related evidence, the likelihood of issuing search warrants for account tracing was low."
He continued, "Regardless of the possibility of warrant issuance, since this case originated from a complaint by a former owner disputing management rights and was based on weak grounds, it was questionable whether conducting search and seizure on asset management companies was proportional and balanced. Compulsory investigations such as search and seizure or account tracing on asset management companies and financial institutions could sharply damage their credibility in the financial market, potentially causing unintended damage such as bankruptcies of related companies. Therefore, it is preferable to consider such actions only when there is a report from supervisory authorities or when insolvency or damage occurs."
He also responded to criticism that the prosecution's dismissal caused numerous additional damages.
Kim emphasized, "The Criminal Division 7 case was not requested by 'Optimus victims,' and the case prosecuted by the Southern District Prosecutors' Office a few months later was filed by 'Seongji Construction investment victims,' not Optimus victims."
He expressed his frustration, saying, "To my knowledge, suspicions of Optimus Asset Management's poor management arose and rumors began circulating in the market around March this year, and media reports started around April. At the time of the investigation (2018), neither I nor the lead prosecutor could have known there was a problem with Optimus."
He questioned, "If a complainant who was fully reimbursed by the suspect files a loan fraud complaint stating 'I have no damage and do not know about other damages,' and the prosecutor dismisses the case without investigating the separate fraud, is the prosecutor then responsible for the remaining fraud damages?"
"No Violation of Delegated Authority Regulations... Puzzled by the Disposition Result Certificate Recently Issued by Seoul Central District Prosecutors' Office"
Kim also explained regarding the criticism of "violation of delegated authority regulations" raised during the audit.
He first refuted the claim that "cases exceeding six months should be decided by the deputy chief prosecutor, but this case was handled by the chief prosecutor after seven months," saying, "Excluding the four months of investigation department's instruction period, the case was handled in about three months, so there was no violation of delegated authority regulations."
Regarding the claim that "important cases with gains exceeding 5 billion KRW should be decided by the deputy chief prosecutor," he explained, "There is disagreement on whether cases with 'no charges' disposition should be considered important cases based on gains exceeding 5 billion KRW. Especially for manual number cases rather than sibling number cases, 'no charges' dispositions have been handled by the chief prosecutor unless they are long-term unsolved cases."
Kim also addressed the allegation of "inadequate notification of non-prosecution reasons" raised during the audit.
He said, "Unlike complaint, accusation, or internal investigation cases, manual cases have no notification regulations, so it is customary not to notify unless the party inquires. Upon verifying the claim that 'notification was delayed by one year and five months until the 19th,' it was found that the Radio Promotion Association requested and the disposition authority, Seoul Central District Prosecutors' Office, issued a 'case disposition result certificate.'"
He added, "The prosecutor decided based on a detailed 14-page non-prosecution reason document prepared by the investigation department's officers, but I do not know why a case disposition result certificate with about ten lines of non-prosecution reasons was recently issued to the Radio Promotion Association."
Regarding why the case was assigned a manual number instead of a sibling number, Kim said, "Whether to assign a manual number is not under the jurisdiction of the criminal division or prosecutor's office, but I guess that since this was a complaint-type investigation request from a specific institution rather than an investigation request by a supervisory agency, a manual number, which is a lower level than a sibling number, was assigned."
"Did Not Report to Then Chief Prosecutor Yoon Seok-yeol or First Deputy Chief Prosecutor... No Contact with Lawyer Lee Gyu-cheol"
Meanwhile, Kim took a clear stance on the controversy regarding the former prosecutor-turned-lawyer.
He said, "After the mention at the Legislation and Judiciary Committee last week, I learned that the defense attorney for this case had worked with Prosecutor General Yoon and the special prosecutor's office during the 'National Political Scandal Special Investigation.' Neither I nor the lead prosecutor had any meetings, calls, or private contact with this lawyer."
Kim also stated, "I did not report to or receive instructions from the then chief prosecutor or first deputy chief prosecutor regarding this case. During my one-year tenure as head of the criminal division at Seoul Central District Prosecutors' Office, I reported about one case every two months on average to the chief prosecutor, totaling only six to seven cases, so I clearly remember whether this case was reported or not."
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