Nexon founder referred to prosecution for malfeasance

[THE INVESTOR] Kim Jung-ju, founder of the country’s biggest online gaming giant Nexon, has been referred to the prosecution for allegations of embezzlement and breach of trust worth 2.8 trillion won (US$ 2.4 billion).

Local civic group SpecWatch said that Kim caused damages for shareholders by short-selling Nexon Korea to Nexon Japan, and also by attaining shares of Nexon Holdings -- former parent company of Nexon Korea -- at cheap prices to create slush funds.

SpecWatch also said Kim had made investments in the Belgium subsidiary of NXC -- Nexon’s current holding company -- that incurred losses for NXC. Kim is currently CEO of NXC.

“Furthermore, we would like the prosecution to note that despite the fact that more than two-thirds of Nexon’s sales are derived from South Korea, most of the profit is flowing into Japan,” said Yoon Young-dae, head of SpecWatch.

In April, the civic group had referred Kim to the prosecution for offering kickbacks in the form of stocks to Jin Kyung-joon, a senior prosecutor who headed the Justice Ministry’s Korea Immigration Service. He resigned when the scandal broke out.

According to a filing at the stock exchange, Jin pocketed 12.6 billion won from selling about 800,000 Nexon Japan shares in 2015. He had bought the shares in 2006. In 2011, Nexon Japan shares were listed, and prices jumped.

The Nexon founder is expected to be summoned over the next few weeks. A travel ban has been issued on him.

By Kim Ji-hyun (jemmie@heraldcorp.com)