Justice minister’s relative indicted on embezzlement charges

The prosecution on Thursday indicted Justice Minister Cho Kuk’s relative Cho Beom-dong on a number of charges, including embezzlement, over dubious financial dealings involving a private equity fund in which the minister’s wife and children had invested.

Cho Beom-dong, 36, is the de facto owner of Co-Link Private Equity, the operator of a fund in which the minister’s wife and their two children, as well as his brother-in-law and his two children, have invested a combined 1.4 billion won.

The younger Cho, who has been detained since his arrest at Incheon Airport last month, is the second member of the family to be indicted -- after the minister’s wife, Chung Kyung-shim.

Prosecutors suspect Chung was an accomplice to the alleged embezzlement, but did not state this in Cho Beom-dong’s indictment papers to avoid exposing details of the ongoing investigation of Chung.

Chung is suspected of investing in stocks through the fund using borrowed names, since her husband’s position at the time disqualified the couple from directly investing in stocks. Cho was appointed senior presidential secretary for civil affairs in May 2017.

Prosecutors questioned Chung on Thursday, 27 days after indicting her on charges of document forgery.

Cho Beom-dong, the son of the justice minister’s cousin, is suspected of acquiring WFM, a Kosdaq-listed company, using private loans, and of attempting to boost the price of its stocks through a false disclosure, saying he had used his own capital to purchase a 5 billion won ($4.18 million) stake in the company instead of relying on loans.

The younger Cho allegedly issued convertible bonds worth 15 billion won to make it look like the company had received investments when it had not.

He is also suspected of embezzling some 7.2 billion won from Co-Link and companies that the fund had invested in, such as WFM and Wealth C&T.

Prosecutors say 1 billion won of the embezzled 7.2 billion won went to Chung, and they are looking into the matter to determine the level of her involvement.

Chung holds WFM stocks under the names of her brother and Cho Beom-dong’s wife, and is suspected of investing in Co-Link stocks using borrowed names.

Prosecutors are also looking into whether the younger Cho used his family connections in his business dealings.

Cho Beom-dong went abroad in mid-August, just before the prosecution’s investigation into the minister’s family began. He allegedly attempted to destroy evidence by instructing Co-Link staff to get rid of the relevant documents.

Sales of Wealth C&T, a lamppost switch manufacturer, soared with massive orders from government offices after the family invested in it, two months after Cho was appointed senior presidential secretary.

By Kim So-hyun (sophie@heraldcorp.com)