The chief of Woongjin Group, a troubled mid-size conglomerate, has been charged with fraudulently issuing commercial paper worth around 119.8 billion won ($107 million) to avoid bankruptcy, prosecutors said Wednesday.
Yoon Seok-keum, the group‘s founder and chairman, allegedly orchestrated the commercial paper issuance worth 100 billion won under the name of the group’s parent company from July to August of last year even with prior knowledge that the group had lost its ability to pay back its debt in the aftermath of a credit rating downgrade, they said.
The group, which was on the brink of bankruptcy, was to file an application for a court-monitored debt rescheduling program due to its poor financial status at the time, they added.
Yoon allegedly issued more commercial paper worth 19.8 billion won in September 2012 without publicizing the fact that the group had applied for the management normalization of Woongjin Holdings with the court after scrapping its earlier plan to sell its cash-cow affiliate Woongjin Coway, prosecutors said.
Woongjin Holdings, which owes about 1.57 trillion won to its creditor banks, has been placed under court receivership since last October.
The Seoul Central Prosecutors‘ Office said that it has also indicted six other former and incumbent executives of the group for allegedly participating as accomplices in the process of issuing the commercial paper.
Yoon, however, has not been detained and will stand trial without physical detention, prosecutors said, after taking into consideration that the disgraced chairman allegedly committed the crime not for personal gain but to save the ill-fated conglomerate.
“We have judged that it will be more advantageous for the victims, including the creditors, to investigate (Yoon) without physical detention in terms of damage recovery,” a prosecution official said.
The seven also allegedly embezzled company funds worth a total of 150 billion won and face multiple charges such as business malpractice and dereliction of duty, prosecutors said.
According to the prosecution office, the executives embezzled company funds worth 59.2 billion won from a luxurious golf course run by the group’s subsidiary in 2009.
The executives are accused of unfairly supporting Woongjin Capital Co., Yoon‘s personal company, with the group’s funds in 2011, prosecutors said. The unfair deals led to financial losses worth some 9.68 billion won, they added.
The probe comes after the nation‘s securities regulator had reported Yoon and other executives to the prosecution office for alleged unfair trading in early May. (Yonhap News)
