By Na Jeong-ju
Staff Reporter

SK Group chairman Son Kil-seung faces imminent arrest for diverting some one trillion won in company funds to invest in foreign futures markets and for other dubious purposes.

The prosecution said on Thursday Son allegedly misappropriated some 700 billion won to invest in overseas futures markets without consulting with the group’s board of directors. He allegedly lost about 90 percent of the money, incurring millions of dollars in damage to the group and SK shareholders, prosecutors quoted a witness from the SK management as saying.

Son is also suspected of being involved in illegal inter-subsidiary trading when he extended some 240 billion won to Asang Corp., an SK affiliate.

Prosecutors suspect all these decisions were made by a small group of executives, including Son and others.

Regarding this, Chey Tae-won, SK’s de-facto owner, will be called in for questioning early next week, sources said.

Prosecutors said they have evidence that most of the slush funds were established through the manipulation of SK Shipping’s accounting books between 1999 and 2002. Son allegedly ordered officials to fabricate records of the shipping arm’s annual earnings to evade taxes amounting to 38 billion won.

The prosecution said it will request an arrest warrant against the chairman as early as today after finishing questioning Son.

``I will cooperate with the investigation as best as I can,’’ a grim-faced Son told reporters as he arrived at the Supreme Public Prosecutor’s Office in Seoul yesterday morning. He refused to make further comments.

Prosecutors said they were not sure if Chey, chairman of SK Corp., was aware of Son’s embezzlement. It has at the moment no evidence of Chey’s involvement, sources said.

Prosecutors suspect some of the funds were also used when SK made illegal political donations during the presidential campaigns in 2002.

Son admitted in October that he donated 10 billion won to the opposition Grand National Party in the lead-up to the election. He also allegedly gave 1.1 billion won to Choi Do-sul, an aide to President Roh Moo-hyun, to support Roh’s campaign. Prosecutors said they are investigating whether Son made further donations to Roh’s camp.

In June, Son was convicted of accounting fraud and illegal stock trading involving SK Global, the main trading arm of the country’s third largest conglomerate. He was released with a suspended sentence, but this time, if convicted, Son will likely be imprisoned, sources said. Chey was also convicted and jailed on the same charges. He was released on bail in October.

Meanwhile, the Seoul District Court held the first hearing for Changshin Textile chairman Kang Keum-won, a Pusan-based businessman known as a long-time sponsor of Roh.

Kang was indicted last month, along with four of Roh’s former aides.

Kang, facing embezzlement and tax evasion charges, said he gave 1.9 billion won of company money to Lee Ki-myung, a key sponsor of Roh, in August last year after making a fraudulent real estate contract. Some of the money was allegedly used to settle the debts of a mineral water firm that was once owned by the president, according to the prosecution.


jj@koreatimes.co.kr