Prosecutors Request Arrest Warrant for Park Sam-gu on 'Unfair Support to Affiliates'... Review on 12th (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporter Bae Kyunghwan] The prosecution has requested an arrest warrant for former Kumho Asiana Group Chairman Park Sam-gu, who is suspected of 'unfair support to affiliates.' The substantive hearing for Park's arrest warrant will be held at 10:30 a.m. on the 12th at the Seoul Central District Court.

On the 10th, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Kim Min-hyung) filed a pre-arrest warrant request against former Chairman Park on charges including violation of the Monopoly Regulation and Fair Trade Act.

Former Chairman Park was reported to the prosecution by the Fair Trade Commission (FTC) on suspicion of unfairly supporting Kumho Express (formerly Kumho Holdings), which has a high ownership stake by the group head, through affiliates such as Asiana Airlines. In August last year, the FTC found that Kumho Asiana Group unfairly supported Kumho Express through affiliates including Asiana Airlines, issuing corrective orders and imposing a fine of 32 billion KRW.

In particular, the FTC judged that Asiana Airlines transferred the exclusive in-flight meal business rights to an overseas company in exchange for that company subscribing to Kumho Express's bonds with warrants (BW). Additionally, nine affiliates including Kumho Industrial were found to have lent funds to Kumho Express at low interest rates. The FTC interpreted that through support from affiliates, Kumho Express gained approximately 16.9 billion KRW in interest rate arbitrage profits, and the group head family, including former Chairman Park, earned tens of billions of KRW in benefits.

During the investigation, the team conducted a search and seizure of Kumho Asiana Group headquarters and Asiana Airlines offices in November last year, securing accounting books and electronic data. Subsequently, former Executive Director Yoon of Kumho Asiana Group's Strategic Management Office and FTC employee Song were found to have exchanged money and deleted unfavorable data for Kumho, leading to their arrest and indictment.

Former Chairman Park was summoned to the prosecution as a suspect on the 15th of last month and was questioned for about nine hours. The prosecution is known to have requested the arrest warrant due to the seriousness of the case and concerns over evidence destruction.

Meanwhile, Park's side requested the convening of the Prosecution Investigation Deliberation Committee to have external experts assess the appropriateness of the investigation when the prosecution considered requesting the arrest warrant, but the request was denied. The Investigation Deliberation Committee is convened by the Prosecution Citizen Committees of each local prosecutor's office to decide on referral, and on the 7th, the Seoul Central District Prosecutors' Office Citizen Committee decided not to refer Park's case.