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Stock Rigger Kim Arrested

By Kim Rahn
Staff Reporter

The prosecution arrested Sunday a key figure in the stock manipulation scandal allegedly involving presidential candidate Lee Myung-bak of the Grand National Party (GNP).

The prosecution will focus its probe on allegations that Lee was involved in the stock rigging and money laundering by his former business partner Kim Kyung-joon.

A local court issued an arrest warrant for Kim following the prosecutors' request a day earlier on charges of fabricating stock prices and embezzling 38.4 billion won in company funds while running BBK and Optional Ventures Korea (OVK).

The charges are the same as those on a warrant issued in January 2004 when Seoul applied to the U.S. Justice Department for Kim's extradition to Seoul. The 41-year-old Wharton school graduate had been held in a detention center in Los Angeles, fighting against a U.S. court ruling that approved of his extradition, before being returned to Korea Friday.

``There is sufficient evidence behind the charges and the chances of him fleeing are high,'' a judge at the court said.

Prosecutors questioned him from Friday night through Sunday. Kim first planned to ask the court to review the prosecution's warrant request Sunday, but gave up his legal right to do so.

According to the prosecution, Kim manipulated the stock price of Optional Ventures Korea, which he set up shortly after the Financial Supervisory Service (FSS) ordered the shutdown of BBK after finding irregularities in its financial reports from December 2000 till November 2001, by spreading false information before fleeing to the U.S.

He also misappropriated 38.4 billion won in company funds, and forged seven passports and other documents.

Kim and Lee co-established LK e-Bank in 2000 when Kim was head of BBK. Kim has claimed that LK e-Bank was the holding company for BBK and thus Lee took part in the stock rigging, a claim Lee denies.

Kim told reporters Saturday that he has brought something to prove his claim ― a possible behind-the-scenes contract ― that shows Lee was the actual owner of BBK.

He said in an interview in August that LK e-Bank and BBK were set up with a 19 billion won investment from DAS, a company Lee's brother and brother-in-law operate. Kim added that Lee, as head of the two firms, was well aware of the firms' irregularities.

It is also suspected that Lee was the real owner of DAS, and if it is true, Lee will be charged for not reporting the company as an asset ― a violation of the law on public post-holders, who have to publicly declare his or her entire wealth. As Seoul mayor, he excluded DAS from his asset list in a filing with the government.

The GNP claims that BBK was Kim's company and had nothing to do with Lee, and that the behind-the-scenes contract, if it exists, may be a fake. The prosecution will get the National Institute of Scientific Investigation examine the authenticity of any documents Kim submits.

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http://www.koreatimes.co.kr/www/news/nation/2007/11/117_13934.html