The entrance of Hwacheon Daeyu, an asset management company suspected of preferential treatment in the Daejang-dong development project in Bundang-gu, Seongnam-si, Gyeonggi-do. [Image source=Yonhap News]
[Asia Economy Reporter Donghoon Jeong] The police have requested the appearance of Mr. Kim, the major shareholder of Hwacheon Daeyu, an asset management company embroiled in controversy over alleged preferential treatment in the selection of the developer for the Daejang-dong development project in Seongnam-si, Gyeonggi-do.
According to the police on the 24th, the Yongsan Police Station in Seoul is coordinating the schedule to summon Mr. Kim for a witness investigation.
The police are reportedly investigating the flow of Hwacheon Daeyu's funds in 2019 and whether the major shareholder and the CEO committed embezzlement or breach of trust. Hwacheon Daeyu was established by Mr. Kim, a former journalist. The company participated in the Daejang-dong development project promoted by Gyeonggi Province Governor Lee Jae-myung during his tenure as mayor of Seongnam in 2014 and received dividends totaling 57.7 billion KRW over three years.
Earlier, in April, the police received a request from the Financial Intelligence Unit (FIU) to verify Hwacheon Daeyu’s fund flows and account transaction details, and the case was assigned to the Yongsan Police Station.
According to the audit report posted on the Financial Supervisory Service’s electronic disclosure system, major shareholder Mr. Kim borrowed 47.3 billion KRW from Hwacheon Daeyu under the name of long-term loans until last year. It was also confirmed that CEO Lee Seong-moon borrowed 2.68 billion KRW in 2019 and 1.2 billion KRW in 2020 along with other executives from the company.
After receiving an official document from the FIU in April this year reporting suspicious fund flows related to Hwacheon Daeyu, the police transferred the case to the Yongsan Police Station and instructed them to conduct a pre-investigation before formal indictment. The FIU reportedly notified that there were abnormal aspects in the 2019 financial transactions of Mr. Kim, the major shareholder and former journalist, and CEO Lee.
The police are currently at the preliminary investigation stage and recently summoned CEO Lee for questioning once.
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