By Kim Yon-se
Staff Reporter

Prosecutors have widened a probe into Hynix Semiconductor on suspicion of illegally channeling funds to several of its affiliates via rigging of its accounting books during the 1996-1999 period.

The prosecution plans to announce the results soon as it is about to complete its months-long probe after summoning executives of the chipmaker, Samil Accounting Corp. and creditor banks.

In addition, there are allegations that several Hynix executives were engaged in embezzlement practices through the false accounting.

The probe has been widened after the Financial Supervisory Service (FSS) concluded that the chipmaker adopted dubious accounting methods during the process of reducing the amount of book-cooking since 2000.

The FSS on Monday announced Hynix misstated accounting to a total of 2 trillion won in 1999 and the prosecution has broadened the scope of its inquiry into the chipmaker, spun off from the Hyundai Group.

The prosecution said its investigation has been focused on possibilities of unauthorized intra-group trading, like the case of the SK Group scandal involving SK Networks, SK Shipping and SK Corp.

The investigation has begun as the state-run Korea Deposit Insurance Corp. had uncovered that Hynix, former Hyundai Electronics, made a false disclosure after fabricating its accounting books in 1999.

It is also investigating whether the chipmaker has been implicated in other malfeasance. Hynix’ former auditor Samil Accounting Corp. is also under investigation by the prosecution.

Financial regulators said Korea Exchange Bank, main creditor of Hynix, was not related to the case but there is a possibility that the prosecution would launch inspections of several banks.

Should the prosecution reveal a web of illegal insider trading among Hyundai affiliates, it could be another troika-led scandal like SK Group (chaebol) / Young Wha Corp. (auditor) / commercial banks and brokerage firms (creditors) in 2003.

Sources said there is a possibility that Hynix had broken accounting rules in a bid to channel funds to Hyundai Engineering & Construction and Hyundai Merchant Marine, also under investigation for false accounting after the 2000 cash-for-summit scandal.

The prosecution and the FSS would continue to dig into the allegations surrounding the Hyundai Group.

A number of high-ranking civil servants have been suspected of being involved in the case of secret funding to North Korea in coordination with the group and a state-run bank.

kys@koreatimes.co.kr