Prosecutors investigating Korea Real Estate Investment & Trust Chairman Cha Jeong-hun on suspicion of embezzling affiliate funds have recently begun summoning company and affiliate employees as witnesses, accelerating the probe. Investigators are also looking into whether some executives and employees at the firm accepted money or other benefits in connection with their duties.
The Seoul Central District Prosecutors' Office's Anti-Corruption Investigation Unit 3, led by chief prosecutor Kim Jin-yong, has been calling in employees from Korea Real Estate Investment & Trust and its affiliates for witness questioning in connection with the case against Cha, who faces charges including violations of the Act on the Aggravated Punishment of Specific Economic Crimes covering embezzlement and breach of fiduciary duty. Witness interviews of headquarters and affiliate staff have been under way since last month.
According to prosecutors, Cha is suspected of siphoning hundreds of billions of won from affiliate funds for personal use. Investigators found indications that he diverted some of the company's money for use as gambling funds at Kangwon Land, among other purposes.
Prosecutors are working to establish the facts of the alleged embezzlement through testimony from Korea Real Estate Investment & Trust and affiliate employees. After completing witness interviews, they are expected to proceed with questioning Cha as a suspect.
Investigators are also pursuing charges of bribery under the Specific Economic Crimes Act against some executives and employees of Korea Real Estate Investment & Trust. Under that law, executives or employees of financial companies who receive, demand or promise money or other benefits in connection with their duties are subject to criminal punishment. Prosecutors are conducting the investigation at the request of the Financial Supervisory Service.
In May 2024, the FSS released findings from an intensive inspection concluding that major shareholders, executives and employees of the two largest real estate trust companies — Korea Asset IN Trust and Korea Real Estate Investment & Trust — had pursued private gain through illegal and improper conduct. The FSS referred the matter to prosecutors, citing conduct that included lending money under the guise of land acquisition financing while collecting high interest rates, and accepting money from parties with business ties to the companies.
After receiving the FSS referral, prosecutors uncovered evidence against Cha while investigating former executives and employees of Korea Asset IN Trust on suspicion of taking kickbacks from pre-sale agency firms, and launched a full-scale investigation into him in July of that year. In December of the same year, prosecutors indicted Korea Asset IN Trust executives and employees on charges including bribery under the Specific Economic Crimes Act.
Prosecutors searched Cha's home and Korea Real Estate Investment & Trust's headquarters in Gangnam-gu, Seoul, in May, seizing relevant materials. With the prosecutors' office set to be reorganized into a public prosecution office and a new Serious Crimes Investigation Agency established in October, the Seoul Central District Prosecutors' Office has adopted a policy of swiftly resolving pending cases. Following compulsory investigation measures against Cha and ongoing witness interviews, prosecutors are expected to bring the roughly two-year investigation to a close.
Korea Real Estate Investment & Trust was established in 1996 as a state-owned enterprise through full investment by Korea Land Corporation and was privatized in 2010. Cha's side acquired the company in 2013. He effectively controls Korea Real Estate Investment & Trust through MKElectron and MK Investment, among other entities.
bell@heraldcorp.com
