Prosecutors took their probe into Justice Minister Cho Kuk’s family’s private equity fund to the next level over the weekend, with a key figure in the Cho family’s shady investment activities grilled for the second day Sunday.
Justice Minister Cho’s cousin once removed was arrested Saturday morning at Incheon Airport on allegations of embezzlement, among other offenses. The arrest came three weeks after he left the country in end-August, just before prosecutors launched a probe into the minister’s ties to private equity fund Blue Core Value-Up 1 and its operator, Co-Link Private Equity. An arrest warrant request was expected to be filed later in the day, as the existing arrest warrant expires Monday at 6 a.m.
Cho Beom-dong, 36, is believed to be the de facto owner of Co-Link, which managed Blue Core Value-Up 1 dubbed "the Cho Kuk fund." The justice minister's wife, their two children and other members of the family are the sole investors in Blue Core Value-Up 1, having collectively invested 1.4 billion won ($1,187). The minister’s brother-in-law had invested 5 million won in Co-Link Private Equity.
Co-Link Private Equity President Lee Sang-hoon, as well as the presidents of two companies that received investment from Co-Link Private Equity, Wealth C&T and WFM, surnamed Choi and Wu, respectively, had left the country with Cho Beom-dong, but returned earlier this month to face prosecution investigation.
The arrest warrant hearing for Lee and Choi was held Wednesday, during which they admitted to some of the accusations, including having misreported the amount Co-Link received from Cho’s family. They also told prosecutors the allegations could not be properly addressed until Cho Beom-dong returned to the country, pointing to him as the chief operator of the fund.
The Cho family-funded private equity made a 1.3 billion-won investment in Wealth C&T’s streetlamp switch-making business in August 2017 while Cho was a senior presidential secretary.
In the same month, President Moon Jae-in mentioned during a ministerial meeting the government’s push for a smart street lighting system. Wealth C&T’s on-year sales nearly doubled from 1.76 billion won in August 2017 to 3.06 billion won in August 2018, having won 117 contracts from 47 provincial governments and state institutions.
WFM is also found to have provided some 14 million won to Cho’s wife -- Chung Kyung-shim, a professor at Dongyang University -- between December last year and this June. Chung explained in a Facebook statement posted last week that she had received the money as “consultancy fees.”
The key issue at this stage of the probe is whether the prosecution will be able to establish the extent of Justice Minister Cho and his wife’s knowledge about the fund’s investment and operation practices.
Cho, arguably the most controversial figure in Moon’s Cabinet to date, has unequivocally denied knowledge of the private equity’s existence.
In a press conference held Sept. 2 as then-justice minister nominee and during his confirmation hearing on Sept. 6, Cho claimed he does not “even know what a private equity fund is” and that he had “never heard of the name Co-Link before in (his) life.”
The new justice minister, who has made prosecutorial reform his mission, ordered a review of reducing the prosecution’s investigative authority and handing the jurisdiction over to police on his first day in office.
While Cho, as nominee, promised to “dutifully cooperate with the prosecution’s probe,” the Justice Ministry reportedly proposed to prosecutors excluding Prosecutor-General Yoon Seok-yeol from commanding the probe surrounding the minister and his family.
Yoon, a star prosecutor who led the probe into corruption charges against impeached President Park Geun-hye and her confidante Choi Soon-sil, was appointed to the top prosecutorial post in July.
By Kim Arin (email@example.com