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Former President Lee Myung-bak stops to answer a reporter’s question on his way to a year-end party at a restaurant in the Gangnam district of Seoul on Dec. 18. Behind him

Prosecutors have concluded at last that DAS belongs to former president Lee Myung-bak. During an investigation that lasted for more than 50 days, they learned that Lee is the “real owner” of DAS and exerts effective control over the company, which contradicts public information about the share structure. While Lee himself holds nearly half (47.3%) of shares in DAS, his older brother Lee Sang-eun and Lee’s sister-in law Kwon Yeong-mi (23.6%), the second largest shareholder, are apparently only proxies for Lee or custodians of his shares.

The significance of the DAS team of investigators’ findings goes beyond merely identifying DAS’s real owner. The conclusion that DAS belongs to Lee Myung-bak lays the groundwork for arguing that Samsung and Hyundai Motor Company’s payment of DAS’s legal fees (which is currently being investigated by the first high-tech crimes division at the Seoul Central District Prosecutors’ Office) constituted bribery. Even if these companies paid millions of dollars to an American law firm, the prosecutors would have faced an uphill battle if they could not prove that there was a “special relationship” between DAS, which was the plaintiff in these lawsuits, and Lee Myung-bak.

“Since we’ve concluded that DAS belongs to Lee Myung-bak, this sets up a scenario in which paying DAS’s legal fees could construed as a bribe given to Lee,” said a source with the prosecutors.

In addition to uncovering DAS’s actual ownership, the prosecutors also found a completely different slush fund – a fund of more than 10 billion won (US$9.4 million) created by the family of Lee Myung-bak that is entirely separate from the previously reported fund of 12 billion won (US$ 11 million). This solves the biggest problem for the prosecutors, who needed to find not only ownership but also criminal charges. They also found a slush fund embezzled by DAS executives, though on a smaller scale.

This means that altogether three slush funds worth more than 20 billion won (US$18.8 million) were created at DAS between 2003 and 2008. There is the slush fund of over 12 billion won that was uncovered in the BBK investigation by the special prosecutor, the separate slush fund containing billions of won created by Lee Sang-eun and other members of the Lee family, and yet another separate slush fund created by company executives, including a former president surnamed Kim. This third slush fund appears to have motivated Kim and other DAS executives to turn themselves in to the prosecutors or to voluntary visit the prosecutors and reveal the truth about the real ownership of the company and the creation of the slush funds.

Lee Myung-bak and other members of his family can likely be charged with embezzlement and breach of trust along with tax evasion, which are basically two sides of the same coin, according to the Act on the Aggravated Punishment of Special Crimes, for giving orders for and participating in the creation of its slush fund. But the prosecutors have concluded that the more than 12 billion won that turned up in the original investigation by the special prosecutor was privately embezzled by a company bookkeeper surnamed Cho.

As a result, the prosecutors have reportedly opted not to indict former special prosecutor Chung Ho-young, 70, who has been accused of not formally notifying the prosecutors of the slush fund exceeding 12 billion won that he had found (corresponding to the crime of special dereliction of duty according to the Act on the Aggravated Punishment of Special Crimes).

There is hardly any time left in Chung’s statute of limitations, which is set to expire on Feb. 21. Investigators reportedly learned that Cho was able to keep working at DAS because he had also been deeply involved in the creation of the slush fund for the family of Lee Myung-bak.

By Kang Hee-cheol, staff reporter

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