Company Chairman Shin Shin-won invested 3 billion won and sold it for 6 million won It became a restraint smoking gun.

Input 2021.03.09 14:04

Choi Shin-won arrested for embezzlement or appointment of hundreds of billions of won SK networks (001740)It was confirmed that the chairman, 68, was on the line of investigation by the prosecution due to a suspicious money transaction of a subsidiary related to a golf course in the past. Chairman Choi established a subsidiary in 2007 that developed and operated a golf course by investing personal money, which became a smoking case (conclusive evidence) in his embezzlement and denial investigation.

According to the legal community on the 9th, the prosecution said that Chairman Choi was responsible for promoting the business of a private golf course, making false payments for family and relatives, and paying for individual paid-in capital increase. SKC(011790), SK Telesys, and other six companies are believed to have embezzled or appointed KRW 223.5 billion. Chairman Choi served as the chairman of SKC from 2000 to 2015, and has been the chairman of SK networks since 2016.

According to the prosecution’s investigation, SK Telesys lent 15.5 billion won unsecuredly to the development of Ants, a golf course operating subsidiary, which is Chairman Choi’s private company, but it did not receive reimbursement properly. Ants Development is a company founded by Chairman Choi in 2007 for the golf course business with a capital of 3 billion won (90.90% stake). The company was incorporated into the SK Group in July of the following year.

Ants Development promoted the construction of an 18-hole membership golf course’Ants CC (now Gamgok CC)’ in Gamgok-myeon, Eumseong-gun, Chungcheongbuk-do. The total project cost is expected to be around 110 billion won. Ants Development borrowed 15.5 billion won (annual interest rate of 8.5%) from SK Telesys in April 2009 for the development of the golf course. That’s five times the amount of capital. At the time of 2009, SK Telesys was a deficit company with a net loss of 11.6 billion won.

Ants Development has fallen into complete capital erosion since 2012 when the business was sluggish due to problems with the purchase of the golf course site. Eventually, Chairman Choi sold his entire stake in Ants Development to a new real estate developer for 6 million won (1 won per share). As Chairman Choi showed enthusiasm for the golf course business at the time, it is said that the business community also considered the sale of Ants Development at a bargain price.

An industry official said, “Gamgok CC is currently under construction, but the project continues to be sluggish due to friction with residents due to land purchase issues,” and said, “Chairman Choi’s decision to sell was correct at the time.” However, the official said, “At the time, there were many analyzes that Chairman Choi was trying to increase his stake in SK Group by raising the value of his assets through the development of a golf course and using it for mortgage loans or capital increase.” Selling it to a start-up company was a rather strange choice,” he said.

Although the company was sold, Chairman Kim has to repay the funds raised for the establishment and operation of Ants Development. In an investigation by the prosecution, it was revealed that Chairman Choi had a company he operated to repay 26 billion won worth of funds instead. The Financial Information Analysis Agency (FIU) under the Financial Services Commission caught this suspicious flow of funds in 2018 and handed the case over to the prosecution. Since then, the prosecution has conducted an investigation after capturing the suspicion that Chairman Choi used the money in SK Networks’ internal funds transaction through account tracking, etc. In the end, the issue of Chairman Choi’s misappropriation and embezzlement began with the golf course business.

Ants Development (now Gamgok CC) only repays the principal of the money borrowed from SK Telesys in 2017, but did not repay interest. In response, the prosecution is known to have applied the charges of malpractice, claiming that Chairman Choi has inflicted damage to SK Telesys.