By Na Jeong-ju
DongA One Group Chairman Lee Hi-sang, the father-in-law of former President Chun Doo-hwan's third son, Jae-man, is being investigated for his alleged involvement in stock price manipulation and insider trading, financial regulators said Wednesday.
Lee, 70, virtually owns the mid-sized food company, which has some 30 subsidiaries, through Korea Flour Mills. DongA One's largest stakeholder is the flour firm, in which Lee holds the most shares with 31.09 percent.
Speculation is growing that this probe is in connection with the prosecution's efforts to find hidden assets of the former President. Last September, prosecutors raided the offices of DongA One to look for evidence amid allegations that Lee was hiding Chun's assets.
Regulators believe that Lee obtained illegal gains by manipulating the stock price of DongA One when it took over animal feed firm, SCF, in 2008.
Lee is suspected of having conspired with stock manipulators to inflate the group's stock price. In the course of absorbing the feed firm, DongA One sold its own shares in 2011 to institutional and foreign investors.
"We are examining the stock transactions at the time based on tips that Lee engaged in price manipulation," an official from the Financial Supervisory Service (FSS) said.
The official denied the speculation that the investigation was associated with Chun's alleged slush fund.
"This is a separate probe into separate suspicions," he said, without giving further details.
Lee has expanded his businesses through marriages with powerful families.
His first daughter, Un-hye, is married to Chun's third and youngest son Jae-man. His second daughter, Yoo-kyung, tied the knot with Shin Ki-chul, whose uncle is former Shindongbang Group Chairman Shin Myung-soo. The chairman's former son-in-law is the eldest son of former President Roh Tae-woo.
Lee's third daughter, Mi-kyung, is married to Cho Hyun-joon, a son of Hyosung Group Chairman Cho Suk-rai. The elder Cho's nephew is Hankook Tire executive Cho Hyun-beom, a son-in-law of former President Lee Myung-bak.
Last year, DongA One drew public attention following reports that it owns Dana Estates Winery in Napa Valley, Calif. There is speculation that some of Chun's secret funds were used to purchase the winery. Chun Jae-man is an executive director at DongA One.
The youngest son reportedly owns a building in central Seoul worth 10 billion won.
Since the prosecutors launched a probe into Chun's slush fund, a number of his relatives have been investigated. They include Lee Chang-seok, Chun's brother-in-law, who allegedly played a crucial role in illegally transferring wealth from Chun to his two sons and relatives.
Last year, Chun's sons were investigated for evading tax using overseas tax havens.
Chun's eldest son Chun Jae-kook, CEO of Seoul-based publishing company Sigongsa, set up and operated a bogus company named Blue Adonis in the British Virgin Islands. There are suspicions that he used Blue Adonis to launder the slush fund amassed by his father in the 1980s.
Early this year, Chun's second son, Jae-yong, was sentenced to three years in prison by a district court on charges of evading taxes concerning a property deal in 2006. He colluded with his uncle to dodge 2.7 billion won in transfer taxes in the process of selling a property.
DongA One's share price fell to the lowest point in 52 weeks at 2,915 won Wednesday, down 3.16 percent from the previous close.
The firm has denied the allegations that it is connected with Chun's slush fund.
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Lee Hi-sang |
Lee, 70, virtually owns the mid-sized food company, which has some 30 subsidiaries, through Korea Flour Mills. DongA One's largest stakeholder is the flour firm, in which Lee holds the most shares with 31.09 percent.
Speculation is growing that this probe is in connection with the prosecution's efforts to find hidden assets of the former President. Last September, prosecutors raided the offices of DongA One to look for evidence amid allegations that Lee was hiding Chun's assets.
Regulators believe that Lee obtained illegal gains by manipulating the stock price of DongA One when it took over animal feed firm, SCF, in 2008.
Lee is suspected of having conspired with stock manipulators to inflate the group's stock price. In the course of absorbing the feed firm, DongA One sold its own shares in 2011 to institutional and foreign investors.
"We are examining the stock transactions at the time based on tips that Lee engaged in price manipulation," an official from the Financial Supervisory Service (FSS) said.
The official denied the speculation that the investigation was associated with Chun's alleged slush fund.
"This is a separate probe into separate suspicions," he said, without giving further details.
Lee has expanded his businesses through marriages with powerful families.
His first daughter, Un-hye, is married to Chun's third and youngest son Jae-man. His second daughter, Yoo-kyung, tied the knot with Shin Ki-chul, whose uncle is former Shindongbang Group Chairman Shin Myung-soo. The chairman's former son-in-law is the eldest son of former President Roh Tae-woo.
Lee's third daughter, Mi-kyung, is married to Cho Hyun-joon, a son of Hyosung Group Chairman Cho Suk-rai. The elder Cho's nephew is Hankook Tire executive Cho Hyun-beom, a son-in-law of former President Lee Myung-bak.
Last year, DongA One drew public attention following reports that it owns Dana Estates Winery in Napa Valley, Calif. There is speculation that some of Chun's secret funds were used to purchase the winery. Chun Jae-man is an executive director at DongA One.
The youngest son reportedly owns a building in central Seoul worth 10 billion won.
Since the prosecutors launched a probe into Chun's slush fund, a number of his relatives have been investigated. They include Lee Chang-seok, Chun's brother-in-law, who allegedly played a crucial role in illegally transferring wealth from Chun to his two sons and relatives.
Last year, Chun's sons were investigated for evading tax using overseas tax havens.
Chun's eldest son Chun Jae-kook, CEO of Seoul-based publishing company Sigongsa, set up and operated a bogus company named Blue Adonis in the British Virgin Islands. There are suspicions that he used Blue Adonis to launder the slush fund amassed by his father in the 1980s.
Early this year, Chun's second son, Jae-yong, was sentenced to three years in prison by a district court on charges of evading taxes concerning a property deal in 2006. He colluded with his uncle to dodge 2.7 billion won in transfer taxes in the process of selling a property.
DongA One's share price fell to the lowest point in 52 weeks at 2,915 won Wednesday, down 3.16 percent from the previous close.
The firm has denied the allegations that it is connected with Chun's slush fund.
