[30 Years of New Military Regime Slush Fund Suspicion] Reinvestigation of Reality and Recovery Solution 'Turning Point'

Ruling and Opposition United in Calling for "Slush Fund Reinvestigation"
Successive Proposals for Slush Fund Recovery Bills Submitted

The key issues surrounding the secret funds of the new military regime focus on how much of the secret funds remain and how they can be recovered. Both ruling and opposition parties have voiced unified calls for reinvestigation and recovery of the secret funds, placing tax and investigative authorities under pressure to thoroughly clarify the suspicions.

The “30 billion won secret fund” case, which surfaced during the divorce lawsuit between SK Chairman Chey Tae-won and Art Center Nabi Director Noh So-young, has currently been assigned to the Crime Proceeds Recovery Division (Chief Prosecutor Yoo Min-jong). It is generally the criminal or anti-corruption investigation divisions that handle direct investigations of complaints or ex officio cases.

[Image source=Yonhap News]

The assignment to the Crime Proceeds Recovery Division is interpreted as a strategic move to first determine whether the matter is subject to investigation before immediately starting one, and to assess whether the secret funds, if proven through investigation, can be recovered into the national treasury through confiscation.

A Seoul Central District Prosecutors’ Office official said, “Once a complaint is received, case assignment is an inevitable procedure. At this stage, it is about reviewing whether the complaint can be investigated, and if so, whether it is appropriate for the prosecution to conduct the investigation or if it should be transferred to the police.” This means that rather than having started an investigation, they are still in the stage of deciding whether to begin one. After reviewing the complaint, the prosecution is expected to decide whether to conduct a direct investigation, transfer the case to the police, or dismiss it.

In South Korea, to recover criminal proceeds domestically, a separate confiscation order must first be issued and finalized in a criminal trial. Unlike the United States, which has adopted an “independent confiscation system” allowing seizure without a final guilty verdict, the current legal framework does not allow confiscation without a conviction. Confiscation is considered an additional penalty, and recovery is a concept based on confiscation.

In other words, if criminal proceeds are identified from a committed crime, they can be confiscated; if not identified, a recovery order is issued, and once recovery is ordered, it can be enforced against other assets of the defendant.

[Image source=Yonhap News]

In the political arena, bills for reinvestigation and recovery continue to be proposed. The “Jeon Du-hwan Recovery Three Acts” (amendments to the Criminal Procedure Act, Special Act on Confiscation of Public Officials’ Crimes, and Criminal Act), which were proposed in the 21st National Assembly, were ultimately shelved. Given that the 22nd National Assembly is in its early term and both ruling and opposition parties are showing active attitudes, the fact-finding process is expected to accelerate.

Jang Kyung-tae of the Democratic Party proposed the “Law on Confiscation of Secret Funds of the Late Former Presidents Jeon Du-hwan and Noh Tae-woo” (amendment to the Act on the Regulation and Punishment of Concealment of Criminal Proceeds), while Park Jun-tae of the People Power Party proposed an amendment to the Criminal Act introducing an “independent confiscation system” to allow confiscation of criminal proceeds even if the criminal has died.

The “Noh Tae-woo Secret Fund Recovery Act,” which both ruling and opposition parties are pushing to introduce, includes provisions to amend the Criminal Act by removing confiscation from the types of penalties and allowing confiscation of criminal proceeds if the conditions for confiscation are met, even when prosecution is not possible. One of the core issues the prosecution is reviewing is whether there is a way to recover criminal proceeds if the existence of the 30 billion won is confirmed and proven to be proceeds from crime, but the statute of limitations for the criminal act has already expired, making criminal punishment impossible?that is, when a guilty verdict cannot be finalized.