Thursday, December 18, 2008

Soap Giant’s Dirty Laundry








The criminal investigation on Aekyung Group Vice Chairman Chae Hyeong-seok revealed his murky relationship with Jang Shin-ho, the now-arrested former head of shopping mall, Ninth Avenue, who allegedly bribed Chae in exchange for buying the mall's building at a cheaper price. / Korea Times



Aekyung Vice Chairman Snared Over Corruption Scandal

By Kim Tong-hyung

Staff Reporter

The Aekyung Group, one of the country's large family-owned conglomerates, has built its reputation on soap, toothpaste, shampoo and dishwashing liquids.

However, a criminal investigation that unveiled an ugly scheme of embezzlement and bribery among top management has put a stain on the group's squeaky-clean image.

A district court issued an arrest warrant for Aekyung Vice Chairman Chae Hyeong-seok, son of late group founder, Chae Mong-in, for embezzling about two billion won (about $1.5 million) in corporate funds between 2005 to 2007.

Chae also allegedly handed 1.5 billion won to Taihnan Textile President Seol Beom, who prosecutors are also looking to arrest, in exchange for sealing a land-purchase deal between the two companies in 2005.

Investigators also believe that Chae received 600 million won from the management of mid-sized shopping mall operator, Ninth Avenue, in return for helping the company receive a 35 billion won bank loan.

Chae has been at the helm of Aekyung's management since taking over chief executive duties from his mother, group Chairwoman Chang Young-shin, in 2006.

However, the eruption of the corruption scandal, which follows a long trail of fizzled business projects, is casting a murky outlook for the 49-year-old's future as a business executive.

An Aekyung spokesman declined to comment about how the company plans to ride out the mess.

Bad Timing

Despite his short time as CEO, Chae has already garnered the reputation as one of the most aggressive minds on the Korean business scene for his determination to transform the soap maker into a massive corporate giant that also throws its weight around in the retail construction and airline industries.

Chae called the shots when Aekyung acquired Jeju Air, a budget airline, in 2005, and also had the group spend around 600 billion won to acquire retail chain, Samsung Plaza, in 2006.

However, it now looks like both of Chae's ambitious business moves are blowing up in his face. Jeju Air lost nearly 40 billion won through the first-half of this year, and now faces a crowded market in which Hansung Airlines, Jin Air and Air Busan are all competing for penny-pinching travelers.

Things aren't looking so bright for Samsung Plaza either, with its Seongnam outlet, the retail chain's biggest store, seeing sales drop by more than 13 percent compared to last year.

The company hopes things will rebound after Samsung Plaza opens a new outlet in Pangyo ``New City'' next year, but the area is also heavily targeted by department store giants Lotte and Shinsegae.

With his new projects failing to deliver a bang for the buck, Chae seemed desperate to go bolder and he made yet another surprise move earlier this year when he declared Aekyung will go ``all-out'' in the real estate business.

In a joint investment with Morgan Stanley Real Estate and the Military Mutual Aid Association, Aekyung established a new company called AMM. But the developer got off to a shaky start when it dropped out of a major project to build a commercial district in the booming Eunpyeong ``New Town'' area in northern Seoul.

Buildings and Dirty Money

Now, in the wake of the corruption scandal, real estate has proved to be the source of trouble for Chae. His bribes may explain how Aekyung beat out other bidders to buy 79,130 square meters of land from Taihan in a highly invested area in Daegu, which city authorities had cleared for redevelopment the previous year.

And the 600 million won Chae received from Ninth Avenue seems to be just part of the allegations surrounding the CEO's relationship with the shopping mall's owners.

The mall in Guro-dong, Seoul, had formerly been the Aekyung Department store, but suspicions arose when the company sold the building to Jang Shin-ho, the now-arrested founder of Ninth Avenue, for just 89 billion won, far below its estimated market value of 400 billion won.

Investigators are taking a hard look on suspicions that Chae may have used some of the two billion won he embezzled from the funds of group subsidiary, Aekyung PFV1, to bribe politicians and policymakers.

There is already evidence suggesting that more than 1.5 billion won of the misappropriated amount was put through a money-laundering scheme managed by executives of Aekyung PFV1.

The scandal surrounding Chae has certainly hit the morale of the group, as the CEO was known to be a popular figure among employees for his down-to-earth personality, epitomized by his 13-square-meter office that is tiny by the standards of Korean chaebol tycoons. Now, Chae can only hope that his smallish room wasn't a rehearsal for time in a cell.






[출처 : 코리아타임스]

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