TaeKwang Group Comparison Balance Sheet between 2008 and 2009

This translated to English from source at Korean Financial Supervisory Service

    
     
    
    

Taekwang groups under investigation for possible criminal actions

Many good citizens believe that crooked businessmen are no longer able to get huge loans from banks using the influence of politicians and high-ranking officials, rewarding them with proportionate bribes. They think the shock of the devastating financial crisis in the late 1990s helped accelerate the extermination of “old-fashioned corruption” and that the nation could make a quick recovery from the recent global recession thanks to the economic health gained through these experiences.
The nation’s top investigators do not seem to share this belief. By their expanding probes into several business groups these days, they are trying to prove that the old practices persisted through the 2000s.
Prosecutors brought up one extreme example. C& Group drew loans totaling 1.3 trillion won ($1.2 billion) from banks, some of which were being supported by government funds, to expand from a small shipping firm to a conglomerate controlling 41 subsidiaries through dubious mergers and acquisitions in only five years. The Central Investigation Division of the Supreme Prosecutor’s Office arrested group founder-chairman Lim Byung-seok last week on charges of fraudulent accounting and embezzlement.
Before C& Group, the prosecution started investigations into Hanwha and Taekwang groups ranked 10th and 40th, respectively, in terms of assets initially on suspicion of keeping large slush funds in borrowed-name accounts. Lotte Construction, a subsidiary of the fifth-ranked Lotte Group, is undergoing an intensive tax investigation. At least three other major business groups are reportedly under investigation for possible criminal actions on a variety of charges, including insider trading, improper asset transfers to evade inheritance taxes, and the raising of slush funds.
C& Group has survived only in name since its leading subsidiary C& Heavy Industries filed for a business workout in October 2008 and banks stopped lending to the floundering conglomerate at the end of the year. That the law enforcement authorities have included the moribund group in the extensive investigations into the corporate world leads to speculation that they might have an ulterior motive besides cracking down on the murky business practices.
The scandal at the hitherto highly-reputed Shinhan Bank, in which its top executives are engaged in mutual accusations of dishonorable uses of corporate money, drew public attention to hidden improprieties in the financial circles. Reduced trust in the banks naturally gives rise to suspicions of outside influence in their lending. Prosecutors are thus poring over the huge loans to C& Group from the partially government-owned Woori Bank and NH Bank, which they believe would not have been possible without political lobbying.
The Central Investigation Division which has specialized in cases of political implications has virtually been out of business since former president Roh Moo-hyun committed suicide in May 2009 while under the division’s corruption probe. Now it took up the case of C& Group which, coincidentally, prospered during the rule of the previous liberal administration.
It is unfortunate that the first major action of the top investigation outfit in nearly a year and a half is brewing doubts about its true motivations. Already some names in the present opposition camp are circulating in the political circles as being the targets of the CID investigation. Prosecutors should not be distracted by such rumors, which can negatively influence law enforcement, but they should seek to uproot the traditional corruption in this country the collusion between business and politics.

Refer to : KoreaHerald & Seoulsports