On September 24 last year, Lee Sang-jik, a member of the Democratic Party of Korea, was entering the press conference room at the National Assembly to express his position regarding the Eastar Jet incident. Lee, the founder of Eastar Jet, took responsibility for the mass layoffs and left the Democratic Party. Photo by Yoon Dong-joo doso7@
[Asia Economy Reporter Choi Seok-jin] As the prosecution is tracking the flow of funds of Lee Sang-jik, an independent lawmaker and founder of Eastar Jet (58), who has had an arrest warrant requested on charges including embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, it was revealed on the 13th that a paper company suspected to be a nominee-owned company of the lawmaker reported a 3.5 billion KRW claim against Eastar Jet to the Seoul Bankruptcy Court.
When the controversy over unpaid wages to Eastar Jet employees and the illicit transfer of assets to his children arose last year, Lee had announced that he would donate all shares of Eastar Holdings, an affiliate owned by his children, to Eastar Jet. However, instead of fulfilling his promise to donate the shares, he is now attempting to recover the claims held through a nominee company, which is expected to spark further controversy.
According to the “Summary Table of Eastar Jet’s Rehabilitation Creditors, Shareholders, and Equity Holders” obtained and reported by the Dong-A Ilbo on the same day, IMSC submitted evidence documents to the Seoul Bankruptcy Court stating that it invested about 3.5 billion KRW in convertible bonds (CB) issued by Eastar Jet on December 18, 2019, and holds claims worth approximately 3.5 billion KRW against Eastar Jet. Additionally, Eastar Holdings, a corporation 100% owned by Lee’s daughter and son, also reported claims of about 600 million KRW against Eastar Jet.
IMSC and Eastar Holdings are companies from which Lee’s nephew A (42), the former finance team leader of Eastar Jet who was previously indicted and arrested, withdrew most of the company’s funds in cash. The prosecution suspects that these companies are nominee-owned by Lee.
If the court recognizes the legitimacy of these claims, there is a possibility that they will be repaid either through court receivership or by the company that acquires Eastar Jet.
Meanwhile, the prosecution discovered circumstances where 11 million KRW of Eastar Holdings’ funds were used under the pretexts of insurance money and deposits for a Porsche driven by Lee’s daughter, and about 60 million KRW of Eastar Jet affiliate funds were used as a rental deposit for an officetel used by Lee’s daughter, and is currently tracing the flow of these funds.
The prosecution believes that these funds were also paid out by Lee’s nephew A under Lee’s instructions.
On the 9th, the Criminal Division 3 of Jeonju District Prosecutors’ Office (Chief Prosecutor Im Il-su) requested an arrest warrant for Lee on charges including embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, embezzlement in the course of business, and violation of the Political Parties Act.
The investigation team reported the plan to request an arrest warrant for Lee to the Supreme Prosecutors’ Office in March, but delayed the request following the Supreme Prosecutors’ Office’s appeal to refrain from politically sensitive investigations ahead of the April 7 by-elections. The arrest warrant was requested shortly after the election.
Since Lee is a sitting lawmaker, the execution of the arrest warrant requires the consent of the National Assembly, which is currently in session.
Lee is suspected of conspiring with his nephew A, who was previously indicted and arrested, to sell about 5.2 million shares of Eastar Jet worth approximately 54 billion KRW held by Eastar Jet group affiliates to a specific affiliate within the group for about 10 billion KRW in December 2015, causing a loss of 44 billion KRW.
He is also suspected of being partially involved in A’s embezzlement crime, where A arbitrarily used 3.8 billion KRW of funds from Eastar Jet affiliates.
Additionally, Lee is charged with violating the Political Parties Act by operating party member councils and other offices before the 21st National Assembly election.
In a trial held on the 10th of last month, A, who was tried first, claimed, “As a practical worker at Eastar Jet, I only did what I was told and feel very wronged,” asserting that his actions were under Lee’s instructions.
A’s lawyer also partially disclosed the indictment, stating, “According to the charges, Lee led the crime and gained economic benefits from it.”
Separately, Lee is also on trial for violating the Public Official Election Act.
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