Telecom giant KT raided over chairman's graft

State prosecutors on Monday raided the offices of KT Corp., the country's top fixed-line operator and No. 2 mobile carrier, as part of their probe into the chairman's alleged corruption.

A team of prosecutors and investigators obtained computer hard drives and confidential documents such as accounting books from a total of 13 places, including the company's offices and houses of its executives, to corroborate the charges, prosecutors said.

Lee, who is under suspicion of inflicting huge losses on KT through dubious business investments and shady real estate deals, tendered his resignation on Nov. 3 amid mounting pressure.

The raid is the third of its kind since the prosecution office first swooped down on the telecommunication giant's headquarters and the residence of Chairman Lee Suk-chae last month.

The probe was launched after a local civic group filed dereliction of duty charges against Lee with the Seoul Central District Prosecutors' Office in February.

The People's Solidarity for Participatory Democracy alleges that the chairman made bad investments in online education and subway network systems, causing the company hundreds of billions of won in losses.

Lee also allegedly played favorites with unauthorized subcontractors, the civic group claimed. The main complaint was that companies that were not included in the usual pool of KT's subcontractors obtained contracts, it added.

The civic group filed another charge against Lee in early October, accusing him of selling 39 office buildings of the company at below the market price, inflicting 86.9 billion won ($81.8 million) in losses on KT and its investors.

Furthermore, Lee is under suspicion of stashing secret funds by inflating the costs of salaries paid to the executives, prosecutors said.

The prosecution office said it will soon summon Lee after wrapping up the questioning of KT executives.

The 58-year-old chairman, a close aide to former President Lee Myung-bak, took the helm of the mobile carrier in 2009 and started his second three-year term in March 2012. He formerly served as a telecommunication minister in 1995. (Yonhap News)