Arrest Warrant Issued for Ex-Chief of State Resource Firm Kim Shin Jong

kpopluv, July 21, 2015, 10:28 a.m.

Prosecutors sought an arrest warrant Tuesday for the former head of a state-owned resources firm over alleged malpractice in a money-losing energy development project. Kim Shin-jong, who headed the state-run Korea Resources Corp. (KORES) during the President Lee Myung-bak administration, is suspected of purchasing Keangnam Enterprises Inc. stocks at an excessive price that caused 21.2 billion won (US$18.31 million) in financial losses to the corporation.

Under the plan by then President Lee, KORES and a consortium of seven South Korean companies, including Keangnam Enterprises, signed a deal in 2006 to invest a combined 1.9 trillion won for a 27.5 percent stake in the energy development project in Madagascar.

Keangnam Enterprises, however, failed to meet the deadline to pay for its stake of 2.75 percent. KORES picked up the tab and paid an additional 17.1 billion won on Keangnam's behalf in 2008, on the condition that the firm repay it by mid-2009.

But Keangnam fell short once again, with KORES taking over 100 percent of its stake in 2010. At the time, speculation swirled that former Keangnam Chairman Sung Wang-jong pressured the president of KORES to purchase the stake. Prosecutors are also investigating whether Kim received bribes in the case.

Kim is also suspected of investing 1.2 billion won in developing rare earth resources, which had a low potential of development, causing 22.4 billion won in losses to the corporation. "The business to develop rare earth resources started off well, and it cannot be simply compared to the current situation," the ex-chief told reporters while emerging from the prosecution office.

A hearing is set for Wednesday to review the legality of the arrest writ. Kang Young-won, a former head of the national oil company, was also indicted on July 17 on charges of purchasing two Canadian firms that caused 550 billion won in losses to the state fund.

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