[KH explains] What is prosecution looking for in its probe of Cho Kuk family?
Here are some key points concerning the probe.
Q. What is being investigated?
Prosecutors on Monday sought a formal arrest warrant for a relative of Justice Minister Cho Kuk as part of a widening probe into corruption allegations surrounding the minister’s family, with a decision expected later in the day.
At the center of the allegations concerning the family’s investments in a private equity fund are Cho’s relative -- who was arrested at Incheon Airport on Saturday on charges of embezzlement, destroying evidence and other offenses -- as well as Cho’s wife, Chung Kyung-shim.
Cho’s cousin once removed is considered the de facto owner of Co-Link Private Equity, the operator of fund Blue Core Value-Up 1, in which Cho’s wife, children and brother-in-law had invested a combined 1.4 billion won ($1.18 million).
He is suspected of rigging stock prices, embezzling 5 billion won from companies invested in by Co-Link, and running the private equity firm without registering himself as its chief executive. He also faces allegations of having tried to pressure witnesses into making false statements at Cho’s parliamentary confirmation hearings.
The private equity fund invested most of the money it received from the Cho family in Wealth C&T, two months after Cho was appointed senior presidential secretary for civil affairs in 2017. After receiving the investment, the company saw a dramatic rise in sales by winning large government projects.
The official CEO of Co-Link Private Equity and head of Wealth C&T were also questioned by prosecutors. The prosecution’s requests to arrest them, however, were rejected by the court last week.
Prosecutors plan to summon Cho’s wife, Chung, soon to look into her involvement in operating the private equity fund.
Chung faces allegations she lent her brother the money to invest in Blue Core Value-Up 1, which then bought Co-Link Private Equity stock worth 500 million won. This could be seen as investing in the fund under the brother’s name and intervening in running the fund.
Making investments in the fund and running it at the same time is in violation of the Capital Market Act.
There are also allegations that Co-Link Private Equity sought a stock exchange listing of Wealth C&T by merging it with WFM, a listed company. Given that most of Cho family’s investment in the fund had gone to Wealth C&T, the family could have made large profits by the stock listing.
Cho’s wife received some 14 million won in consultancy fees from WFM between December last year and June this year
Chung, who is now hospitalized, has formed a defense team of 13 lawyers.
The prosecution is also looking into Chung’s alleged attempt to destroy evidence. She replaced her desktop computers at her residence and office through a private banker who manages her assets. The prosecution has secured the hard disks of the laptops.
Prosecutors launched a probe into Cho’s family in the lead-up to Moon’s appointment of Cho as justice minister earlier this month. In an unprecedentedly swift and sweeping move, the prosecution raided more than 20 locations and indicted Cho’s wife on forgery charges.
The prosecution’s probe, however, is focusing on the alleged shady investment by Cho’s family members in the private equity fund.
The preparatory hearing for Chung, indicted on forgery charges, will be held on Oct. 18 at the Seoul Central District Court.
Cho has denied knowledge of the investment. He also denied any involvement in operating the private equity fund and other irregularities.
He has said he would not be briefed on or command the investigation of his family.
Cho said Monday that he would “oversee” the overall practices and administration of prosecutors’ investigations and indictments to see whether they are in line with the spirit of the Constitution.
Q. How are the political parties reacting?
Opposition parties fiercely protested the appointment of Cho as justice minister, paralyzing parliamentary sessions.
On Monday, the parties again clashed over whether they would have Cho address the parliament.
After a number of opposition lawmakers shaved their heads to protest Moon’s decision to appoint Cho as justice minister, Hwang Kyo-ahn, chief of the main opposition Liberty Korea Party, also did so in front of the presidential office Monday afternoon to call for Cho’s dismissal.
The minor opposition Bareunmirae Party began to collect signatures from its lawmakers to submit a proposal to launch a parliamentary investigation into Cho.
Q. Is there a power struggle between the prosecution and Justice Ministry?
The government and ruling Democratic Party of Korea are set to hold a meeting Wednesday, with the embattled Cho Kuk in attendance, concerning measures aimed at restricting revealing to the public charges against a suspect.
Cho is said to have prepared punitive measures for prosecutors who leak information on ongoing investigations.
The move is seen as part of a power struggle between the Justice Ministry and prosecution.
Prosecutors’ rare move to open an all-out probe into the justice minister’s family is seen by some observers as a rebellion by those opposed to the Moon administration’s prosecutorial reform drive.
The Moon administration has pushed to hand over more investigative authority to police and establish an independent body tasked with looking into corruption allegations involving high-ranking government officials as part of efforts to curb the prosecution’s power.
Tension has run high as the new justice minister already has ordered several measures for the reform of the prosecution and prosecutors have accelerated the probe into his family for the past week.
In Korea, the Justice Ministry has control over the prosecution, as it oversees its human resources and administration. The majority of senior positions in the ministry are filled by prosecutors.
Controversy surfaced last week after Justice Ministry’s senior officials were reported to have suggested that prosecutors exclude Prosecutor General Yoon Seok-youl in their investigation into Cho’s family.
That triggered criticism that the ministry was attempting to pressure the prosecution, which is supposed to be free from any political influence.
(laeticia.ock@heraldcorp.com)
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