LG family scion caught after 8-year flight from share price manipulation charges

Koo Bon-hyun, a third-generation scion of the extended LG family, has been detained after eight years on the run from share price manipulation charges.

The Seoul Metropolitan Police Agency Metropolitan Investigation Unit announced Friday that it detained Koo on Wednesday on charges of violating the Capital Markets Act and embezzlement and breach of fiduciary duty under the Act on the Aggravated Punishment of Specific Economic Crimes, after extraditing him from Cambodia, where he had been subject to an Interpol red notice.

Koo, 57, is accused of using shell companies to acquire a telecommunications device manufacturer and a game developer with no capital of his own, then manipulating their share prices through false disclosures to pocket about 14.5 billion won ($9.23 million) in illicit gains. He also faces charges of embezzlement and breach of fiduciary duty totaling 22.7 billion won.

According to the investigation, Koo took out loans using shares in the listed companies he had acquired as collateral, used the proceeds to buy unlisted firms with strong business prospects, then issued favorable disclosures as if he had funded the acquisitions with his own capital before selling shares held under borrowed names.

He is also accused of embezzling 4.6 billion won by spending funds from affiliated companies on entertainment and by entering into fictitious consulting contracts. Separate charges allege he caused losses of about 12.3 billion won by lending company funds without collateral and by pledging shares owned by one corporate entity to affiliated firms without authorization.

Koo left for the Netherlands in October 2018, before prosecutors launched their investigation, and disappeared. Prosecutors obtained an arrest warrant the following May, requested an Interpol red notice and moved to invalidate his passport. Three company associates who had conspired with him in the scheme were indicted without detention at the time.

After roughly eight years as a fugitive, Koo was arrested by local police in Cambodia in September. He was extradited to South Korea on Monday, and following a pre-detention hearing was formally detained on Wednesday.

Koo is the son of Koo Ja-keuk, chairman of EXA E&C and the younger brother of the late Koo Ja-kyung, honorary chairman of LG Group. He has a prior criminal record on share price manipulation and embezzlement charges: he was indicted in 2007 for manipulating share prices and siphoning off tens of billions of won from a company he acquired in the advanced materials sector, and in 2012 the Supreme Court upheld a three-year prison sentence against him.