[Exclusive] Registered Brother, Brother-in-law, and Wife as 'Fake Employees' for Salaries, Collected Severance to Prevent Whistleblowing

MedicoX Indictment Details
False Employee Registration for In-Laws and Severance Payouts
Two Chairmen on the Run and Wanted by Authorities

The prosecution's indictment specifies that the executives of MedicoX, a KOSDAQ-listed company who were indicted on July 8, registered their wives, brothers, brothers-in-law, and even acquaintances as 'employees' on paper, then collected salaries and severance payments over several years. According to the prosecution, they paid company funds to family members and acquaintances who were listed in name only and did not actually work, distributing these funds as if they were regular salaries. In order to prevent internal whistleblowing, they even fabricated false resignation letters and collected additional compensation.

According to the indictment released on August 4, the MedicoX chief executive officer, who was indicted on July 8, conspired with the chairman of MedicoX to falsely register his wife as a company employee. From November 1, 2022, to March 31 of this year, he paid a total of 164.39 million won to her in the name of salary and severance pay, thereby embezzling corporate funds.

The prosecution believes that this type of 'false employee registration' and embezzlement was not limited to the chief executive officer alone. According to the indictment, a MedicoX director falsely registered his brother, wife, brother-in-law, and an acquaintance as employees around January 4, 2021. According to the list of criminal acts, a total of 288.34 million won was paid to these four people as salaries and severance pay. The executive director and a former director each embezzled 133.38 million won and 147.14 million won, respectively, by falsely registering their wives as employees.

The indictment also specifies that, in order to prevent internal whistleblowing, false resignations were filed and 300 million won in severance pay was received. The MedicoX chairman and vice chairman, around March 2022, heard from the previous management that they would "report the company for improper disclosure." To prepare funds to silence this, they fabricated documents to make it appear as though they had resigned, even though they had not, and collected 300 million won under the pretense of 'severance compensation,' according to the prosecution. The prosecution also regarded this as embezzlement.

The Seoul Central District Prosecutors’ Office Anti-Corruption Investigation Division 3 (headed by Lee Seunghak) has determined that the MedicoX executives misappropriated a total of 52 billion won in corporate funds. The MedicoX vice chairmen, Park and Lee, have been indicted and detained, while two chairmen who have fled have been placed on the wanted list. The remaining three individuals facing charges of embezzlement and related offenses have been indicted without detention. The Korea Exchange is scheduled to make a final decision on whether to maintain MedicoX's listing by August 11. A prosecution official stated, "We plan to hold the executives who evaded pretrial questioning and fled fully accountable for their crimes."