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| Investors who incurred damage from the bad investments of private equity funds by two asset management firms hold a press conference in front of the National Assembly, Tuesday. |
By Do Je-hae
Two financial fraud cases are spreading to the political circle with lobbying allegations involving ruling bloc figures.
The cases could become another political battleground, with the main opposition People Party of Korea (PPP) calling for an investigation by a special counsel.
Investment entities ― Lime Asset Management and Optimus Asset Management ― have been embroiled in massive financial fraud allegations as they have been unable to return more than 1 trillion won ($838 billion) to their customers due to bad investments.
As the financial authorities' inspections and the prosecution's investigations into the cases have been stalled, suspicions have emerged that key officials in the Moon administration and the ruling Democratic Party of Korea (DPK) were targets for lobbying by the troubled hedge fund operators.
One of the figures was Kang Ki-jung, former senior presidential secretary for political affairs. Kang is facing allegations that he took bribes from Kim Bong-hyun, the former chairman of Star Mobility and one of the key suspect in the Lime fraud. During a trial last week, Kim testified that he had given 50 million won ($44,000) to the former senior presidential aide in July 2019 through his co-conspirator Lee Kang-se.
Kang has denied the allegation and has filed a legal complaint with the prosecution for defamation against Kim. During a media interview, Kang admitted that he had met with Lee at Cheong Wa Dae on July 28, 2019, but that reports about him taking money at his office were absolute nonsense.
"It is impossible for someone to enter Cheong Wa Dae with that kind of money. Visitors must pass through security," Kang said. There were no bribes or solicitation, he said.
Some other heavyweights in the ruling bloc have also faced allegations of connections with officials of the fund management companies, including DPK Chairman Lee Nak-yon, Gyeonggi Province Governor Lee Jae-myung and DPK Rep. Ki Dong-min. Chairman Lee, who served as President Moon's first prime minister, has been accused of receiving illicit financial assistance from an affiliate of Optimus.
With the growing suspicions, Prosecutor General Yoon Seok-youl ordered the expansion of the teams investigating the fraud cases, Monday. The order is regarded as a reprimand for insufficient work done by the Seoul Central District Prosecutors' Office so far, and also a willingness to thoroughly look into the allegations that ruling bloc figures were involved.
But the PPP is demanding a special investigation into the scandal, saying most of the top positions at the prosecution have been filled with pro-government people.
"Many names at the center of power in the Moon administration have been linked to the scandals," PPP floor leader Rep. Joo Ho-young said during a party meeting Tuesday. "The current prosecution cannot be trusted to carry out a fair investigation."
The main opposition has set up a special committee to look into the scandal.
In response, the DPK said the opposition's claims were political offensives comprised of suspicions without grounds, and exaggerations.
"The Lime and Optimus cases are financial scams by private equity funds," DPK floor leader Rep. Kim Tae-nyeon said in a party meeting at the National Assembly, Tuesday. "If you want to call it a corruption scandal involving influential ruling bloc people, you have to provide a considerable amount of evidence."
