[Invest&Law] Final Stages of Political Investigations, Corporate Investigations Gain Momentum

Veteran Corporate Investigators Positioned in Key Departments
Korea Land Trust, Coupang, SK Group, etc.
Tense Business Circles "Assessing Prosecutors' Tendencies"

[Image source=Yonhap News]

As most investigations into previous political incidents are nearing completion, the prosecution's focus is shifting toward corporate cases. The newly appointed investigative leadership and staff, replaced in the personnel reshuffle last May, plan to expand investigations comprehensively while handling existing corporate cases. Some observers suggest that a corporate affairs crackdown is beginning.

With prosecutors experienced in corporate and economic case investigations leading key departments, the business community is on edge. Some companies and law firms are reportedly concentrating on understanding the tendencies of chief prosecutors and investigative prosecutors in the Central District Prosecutors' Office's Anti-Corruption Division, Fair Trade Investigation Division, Southern District Prosecutors' Office's Financial Investigation Division, and Eastern District Prosecutors' Office's Criminal Division.

Since the appointment of Chief Prosecutor Lee Chang-soo (53, Judicial Research and Training Institute class 30) at the Seoul Central District Prosecutors' Office, longstanding political cases have been undergoing final procedures. The presidential election interference and public opinion manipulation case, investigated by Anti-Corruption Division 1, resulted in the indictment and detention of Kim Man-bae and Shin Hak-rim, while the investigation into First Lady Kim Geon-hee's luxury handbag receipt allegations is left with only her questioning. The Democratic Party's money envelope scandal is also expected to proceed swiftly if the involved lawmakers cooperate with summons.

New significant cases are being intensively assigned to Anti-Corruption Divisions 2 and 3. The Central District Prosecutors' Office Anti-Corruption Investigation Division 3 (Chief Prosecutor Lee Seung-hak) has launched an investigation into allegations of corruption at Korea Land Trust, targeting Chairman Cha Jeong-hoon and executives on charges including bribery and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. After reviewing inspection materials on illegal private gains by major shareholders and executives of Hantoshin and Korea Asset Trust, handed over by the Financial Supervisory Service, the prosecution plans to conduct supplementary investigations. Typically, cases notified by the Financial Supervisory Service are handled by the Seoul Southern District Prosecutors' Office, but since this is the first case exposing illegal private gains by major shareholders and is a serious matter, it has been assigned to the 'frontline' special investigation department. Chief Prosecutor Lee Seung-hak previously led the Financial Securities Crime Joint Investigation Team 1 at the Seoul Southern District Prosecutors' Office in 2022, indicting Ra Deok-yeon, a key figure in the SG Securities stock price crash, and also investigated the Terra-Luna coin incident.

The 'product search ranking manipulation' case involving Coupang, with fines exceeding 140 billion won, has been assigned to the Eastern District Prosecutors' Office Criminal Division 6 (Chief Prosecutor Lee Sang-hyuk). Criminal Division 6 is also investigating allegations of unfair transactions between SK Group and the private equity firm Alchemist. The Eastern District Prosecutors' Office plans to concentrate investigative personnel in Criminal Division 6 to review materials and sequentially summon related individuals under investigation.

Existing corporate investigations are also gaining momentum. The Seoul Southern District Prosecutors' Office Financial Investigation Division 2 (Chief Prosecutor Jang Dae-gyu), investigating allegations of market manipulation involving Kakao's SM Entertainment, summoned Kakao founder and management reform committee chairman Kim Beom-su on the 9th for questioning on charges of violating the Capital Markets Act. Additionally, the Southern District Prosecutors' Office is handling four other cases, including allegations of preferential call allocation by Kakao Mobility, the high-priced acquisition of Baram Pictures by Kakao Entertainment, and embezzlement and breach of trust allegations involving executives of Kakao's blockchain platform Klaytn affiliates.

Woo Bin, Legal Times