Former Prime Minister Lee Wan-koo will be questioned Friday over allegations that he received illicit money from Sung Woan-jong. Lee is the second politician ― after South Gyeongsang Province Gov. Hong Joon-pyo ― to face a grilling by prosecutors in the Sung scandal.
Given that people who are suspected of having received illegal money from the late construction tycoon are big-name politicians like Lee and Hong, public attention tends to be focused on Sung’s collusive ties with politicians.
But not to be ignored in the prosecution’s probe into the Sung scandal are the suspicions that Sung kept corrupt connections in the financial sector as well. Well before the Sung scandal surfaced, the Board of Audit and Inspection had already found suspected wrongdoings by the Financial Supervisory Service and Shinhan Bank while Sung’s Keangnam Enterprises was going through a financial crisis.
As expected, clues are surfacing as the prosecution shifts its investigation into high gear: Last week, investigators armed with court-issued warrants searched the FSS, the home of a former senior FSS official and offices of Shinhan.
The probe is focused on the suspicion that Sung used his connections and influence as a ruling party lawmaker to pressure the FSS and Shinhan, the main creditor bank of Keangnam, to provide favors to the near-bankrupt construction firm.
It is rare for the same firm to be granted a “workout” debt rescheduling program three times, which was the case of Keangnam. Most noteworthy is that in 2013, Keangnam entered into a debt-to-equity swap without capital reduction instead of applying for a court receivership.
Prosecutors suspect that Sung pressured or bribed FSS officials to exert influence on creditors to help Keangnam survive the crisis through the debt-equity swap and a workout program, which was the third one for the struggling firm.
Sung’s daily schedules obtained by prosecutors showed that the late tycoon frequently met senior officials of the FSS and the Financial Supervisory Commission, as well as top executives of state-run and commercial banks. Then a member of the National Policy Committee, which supervises both the FSC and the FSS, Sung even called a top FSS official into his National Assembly office several times.
It is no secret that Sung had close relationships with senior finance officials hailing from his home region of Chungcheong. Keangnam soaked up loans totaling 1.3 trillion won from state-run banks and commercial lenders, about 80 percent of which is likely to be paid off by taxpayers’ money. All those responsible for this absurdity must be ferreted out and punished.
