Former CEO of Taekwang Group Affiliate Denies Charges in 15 Billion Won Fraudulent Loan Conspiracy Case

Former CEOs and executives of Taekwang Group affiliates denied charges of conspiring to provide improper loans at the first trial.

According to the legal community on the 26th, the 12th Criminal Division of the Seoul Western District Court (Chief Judge Kwon Seong-su) held the first trial at 4 p.m. on the same day for five related parties, including Lee (58), former CEO of Taekwang Group affiliates Goryeo and Yegaram Savings Banks, who was indicted on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (breach of trust), Kim (63), who was then the head of the credit review committee and risk management officer of the bank, and Lee (65), CEO of real estate development company A.

The former CEO’s side denied all charges, stating that he never conspired with former Chairman Kim Ki-yu to provide improper loans and did not violate any duties as the savings bank CEO. The former CEO’s lawyer argued, "Although the prosecution constructed the charges as if there were close phone calls between former Chairman Kim and the former CEO followed by a series of loan processes, no factual evidence supporting a conspiracy relationship has emerged. Similarly, there is no proof regarding the prosecution’s claim that the former risk management officer Kim and the former CEO conspired to proceed with non-performing loans."

The court ruled, "There is no indication in the indictment that the defendants intended to use their relationship with former Chairman Kim to make phone calls or other circumstances," and the prosecution stated it would consider submitting additional evidence, citing insufficient evidence production.

The CEO of company A also denied the charges, claiming, "No actual financial loss occurred, and there was no risk of loss from the beginning." The lawyer for Lee stated, "The essence of the loan in this case is a land-secured loan. The loan was secured by land in Yeonhui-dong, and the collateral value of the land exceeds the loan principal. The land value of 65 billion KRW is enough to fully repay the loan, so no damage occurred."

According to the prosecution, Lee, known as a close aide to former Chairman Kim, the second-in-command of Taekwang Group, is accused of causing damage to the company by forcing a loan of about 15 billion KRW last August, despite knowing that Lee’s company was unable to repay the loan after Lee requested an improper loan from a senior Taekwang Group official.

The prosecution believes that the former CEO improperly executed the loan to Lee’s company, which was in urgent need of funds to pay about 2 billion KRW in interest for extending the maturity of an existing 25 billion KRW Saemaeul Geumgo loan and approximately 10 billion KRW in private loans. It was also investigated that Lee used 8.6 billion KRW of the loan funds deposited into a nominee account for personal purposes such as stock investment, unrelated to the loan’s purpose of repaying existing loans, leading to charges of embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes.

The prosecution received a complaint from the law firm responsible for Taekwang Group’s external audit in November last year, conducted a search of former Chairman Kim’s residence in January this year, and tracked their accounts as part of the investigation. The next trial is scheduled for October 10 at 2:30 p.m.