Confiscated Assets Surge Eightfold After Revival of Securities Crime Joint Investigation Team
Monthly Indictments Jump by 203%
Legal Experts Call for Resolving the "Korea Discount"
Supplementary Investigative Authority Should Remain with the Public Prosecution Office
The Ministry of the Interior and Safety has been designated as the supervising authority for the newly established Major Crime Investigation Agency (Jungsoo Agency), which will investigate financial, securities, and corruption crimes following the abolition of the Prosecutors' Office. Concerns are being raised that the sharp increase in crimes such as market manipulation, which occurred after the abolition of the Financial and Securities Crime Joint Investigation Team in the past, may be repeated. As a result, there are calls to at least retain supplementary investigative authority for the newly established Public Prosecution Office in cases involving major crimes such as financial and securities offenses.
According to documents obtained by Asia Economy on September 8, the performance of the Financial and Securities Crime Joint Investigation Team prior to its abolition (January 2018 to December 2019) included an average of 5.2 individuals indicted and detained per month, and 20.6 individuals indicted per month. However, during the abolition period (January 2020 to April 2022), these figures plummeted to 1.6 and 6.2 per month, respectively. The number of indictments dropped by 69.9%, and indictments with detention fell by 69.2%.
In contrast, from May 2022, when the team was reinstated, through December of last year, the monthly average rose again to 4.1 individuals indicted and detained, and 18.8 individuals indicted. Following the restoration of the joint investigation team, direct investigations of major cases requiring swift action were carried out in cooperation with relevant agencies such as the prosecution and the Financial Supervisory Service, resulting in a 156.3% increase in monthly indictments with detention and a 203.2% increase in monthly indictments compared to the abolition period.
The total amount of assets preserved for confiscation also soared from 444.9 billion won during the abolition period to 3.5734 trillion won after reinstatement, an increase of more than eightfold. The joint investigation team preserved 233.3 billion won in the Terra-Luna case, 278.9 billion won in the Youngpoong Paper stock manipulation case, and 730.5 billion won in the SG Securities stock manipulation case, among others.
The problem is that financial and securities-related crimes have been steadily increasing every year. The number of financial and securities cases directly investigated by the prosecution was 209 in 2022, 241 in 2023, and 284 last year. Including cases referred by the police, the numbers reached 722 in 2022, 838 in 2023, and 896 last year. With the Major Crime Investigation Agency, which will be led primarily by the police, expected to launch, financial and securities crimes are likely to surge.
The joint investigation team was abolished in January 2020 during the tenure of former Minister of Justice Choo Mi-ae, but was reestablished at the Seoul Southern District Prosecutors' Office in May 2022 following criticism over weakened crime response capabilities. In May 2023, it was formally institutionalized as the Financial and Securities Crime Joint Investigation Division. When the team was abolished, veteran investigators with more than 10 years of experience who specialized in financial and securities crime investigations were dispersed to local offices, significantly weakening the ability to respond to financial crimes. Now, with the decision to establish the Major Crime Investigation Agency under the Ministry of the Interior and Safety, there are concerns that another vacuum will be created among the group of 'investigative experts' in the financial and securities sectors, including prosecutors and investigators. The specialized investigative capabilities that the prosecution has accumulated in financial and securities crimes could disappear overnight.
When financial and securities crimes such as stock price manipulation prevent the formation of fair market prices, there is a high possibility that investors will turn to overseas stock markets. Legal experts widely agree that swift and strict punishment of such crimes is necessary to resolve the 'Korea Discount' (the phenomenon where Korean companies are undervalued compared to their actual worth) and to restore trust in the domestic stock market. Many argue that at the very least, supplementary investigative authority should remain with the newly established Public Prosecution Office after the abolition of the Prosecutors' Office, so that there is at least some capacity to respond to financial and securities crimes.
A lawyer who previously served as deputy chief prosecutor pointed out, "Most financial and economic crimes are complex cases reported or referred for investigation by financial authorities, but it is unlikely that investigators from the Major Crime Investigation Agency, who come from police or National Investigation Headquarters backgrounds and have not previously investigated such cases, will be able to conduct proper investigations." He added, "Until extraordinary measures are introduced, criminals in the financial and economic sectors will have a good opportunity to avoid punishment."
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