1. The ruling Democratic Party’s plot to bring down Prosecutor General Yoon, Seok-yeol during the recent general election
The 21st general election ended with a landslide victory for the ruling party. The Democratic Party won 163 seats in their constituencies, and the Citizens’ Party, which was created by the Democratic Party to vie for proportional representation seats, won 17 seats. That amounts to 180 seats, or 60 percent of the total 300 seats. If one includes the seats won by the allied Open Democratic Party (3) and Justice Party (6), the number of seats in the ruling party’s alliance totals 189. As a result, in the 21st National Assembly, the ruling party’s supermajority will have the ability to push through, on its own, any legislation other than a constitutional amendment. Under the National Assembly Advancement Act, the enactment or amendment of any bill can now be passed on a fast track basis without any negotiation with the opposition party. Even a proposal for a constitutional amendment which requires 200 lawmakers will be relatively easy to pass if only a few votes from opposition lawmakers are obtained by means of deception. The Moon, Jae-in administration has taken full control of the legislature. After the launch of the Civil Servant Corruption Investigations Unit, which is expected in July, even the courts, the prosecutors’ office, and other branches of the judiciary will essentially be under Moon’s control. He will dominate the executive, legislative, and judicial branches of the government. Since the media, the fourth locus of power, has been dominated by Moon and his allies for a long time, Moon’s unprecedented concentration of power will be only a matter of time. Prosecutor General Yoon, Seok-yeol and his fellow prosecutors have been the greatest thorn in the side of the seemingly invincible ruling party since the Cho, Guk scandal in August of last year. That is because the ruling party’s disgraceful hypocrisy was revealed to the public through the investigation into the corruption of Minister Cho’s family and the Blue House’s intervention in the Ulsan mayoral election. The Moon administration knows that Yoon and his prosecutors are the only impediments to the type of influence-peddling that has been committed by the administration and its allies. Therefore, some of the ruling party’s candidates, especially those who had been involved with pro-Moon forces in the judicial field, were busy expressing their hostility to and harshly criticizing the prosecution rather than making policy pledges or focusing on political attacks against the United Future Party. The day after the election, they actually demanded that Yoon step down. If Yoon refuses to step down, they intend to take him down by means of the first case undertaken by the Civil Servant Corruption Investigations Unit.
2. Reasons why the ruling camp fears Yoon and is trying to bring him down
Yoon was appointed as chief of the Seoul District Prosecutors’ Office and Prosecutor General by the Moon administration. Nevertheless, their reason for turning him into a “public enemy” now and attempting to bring him down is because they fear prosecution probes into their alleged wrongdoing. The prosecution’s investigations are directly related to Moon’s fears for his post-presidential status and security. Moon has witnessed two former presidents Lee, Myeong-bak and Park, Geun-hye arrested and jailed for supposedly abusing their authority, and he learned that it will be difficult for his regime to get away with numerous irregularities and policy failures if he is later prosecuted for having abused his authority, based on these precedents. Those in the ruling camp believe they could be prosecuted by Yoon, who is a strong, principled, and highly trusted prosecutor, when there is a high possibility of corruption in the process of improper political interventions or power struggles during the second half of Moon’s term. Therefore, using Attorney General Choo, Mi-ae’s authority over personnel and organization, they drastically reduced the size of the prosecution’s direct investigation department, dismissing or reassigning senior prosecutors close to Yoon, and demanding that prosecutors obtain prior approval from the Attorney General when organizing an investigation team. They are using every possible means to keep Yoon in check, but they still appear worried.
3. Corruption of ruling camp awaiting investigations by the prosecution
(1) Fraudulent Ulsan mayoral election
Last January, the prosecution indicted 13 former and incumbent presidential secretaries and Ulsan Mayor Song, Chul-ho after discovering that the Blue House had systematically intervened in the Ulsan mayoral election two years ago. The prosecution had delayed a full-fledged investigation into Moon’s former chief of staff Lim, Jong-seok and civil affairs secretary Lee, Kwang-chul until after the general election. Crimes relating to elections are extremely serious, and President Moon could also be held responsible depending on the results. In this regard, this election fraud case is the first reason why the ruling camp is trying to obstruct prosecutors and prevent them from proceeding with further investigations.
(2) Sillajen stock price manipulation case
The Sillajen case was one in which Sillajen, a Busan-based biotech R&D company, saw its stock price soar without a penny of sales performance just because of the possibility of a new drug development, but its stock price plunged after it was revealed that there was no possibility of any such new drug development, causing significant damage to shareholders. The market capitalization of Sillajen soared up to 10 trillion won (second in market capitalization), but became less than 1 trillion won as of February, 2020. Without a turnaround, Sillajen shares will go through the process of delisting and become worthless. In February, 2019, however, the full story of the case began to be revealed as the prosecution launched an investigation into the background of Sillajen and the increase in its stock price. Sillajen’s key executives were found to have disposed of all of their shares when they reached their maximum price ahead of the clinical trial, meaning they knew in advance that the clinical trial would be a failure. On April 17, just after the general election, Sung, Bo-ki, a senior judge in charge of warrants at the Seoul Southern District Court, issued an arrest warrant for former Sillajen CEO Lee, Yong-han and former auditor Kwak, Byung-hak, saying, “There are concerns of them destroying evidence and fleeing.” Despite the slim possibility of developing new drugs, in December, 2016, when then-president Park Geun-hye was about to be impeached, Sillagen was listed on KOSDAQ. Key executives of Sillagen disposed of their shares, and part of the astronomical proceeds flowed into a political fund for Moon’s party. These are some of the controversial issues in this case.
(3) Lime scandal
The Lime Fund began as an investment consultancy in 2012 and turned into an asset management company in 2015. It joined hands with Shin-han Investment Corp. in the summer of 2017 to enter the foreign trade and financial fund market, which has grown to 6 trillion won under the guise of a pledge to realize an annual return of 5 to 8 percent. Many investors put billions of won in the fund.
In July, 2019, Lime Asset Management bought a large number of convertible bonds (CBs) of zombie-like companies in a bid to boost short-term profit margins. In the process, Lime purchased CBs under the name of another company to avoid the bond holding limit regulation. Also, in the event of a loss for one fund, the loss was made up from the funds of another. In October, the price of stocks incorporated into Lime Asset Management’s fund plunged, leading to a fund-run crisis and eventually to stop redemption.
The suspension of fund redemption by private equity funds has basically the same effect as bankruptcy. In February, 2020, in an investigation by the Financial Supervisory Service, creditors and investors found that Lime Asset Management’s parent fund and part of its subsidiary funds are expected to lose up to 1.6 trillion won, excluding losses from overseas trade funds, leaving its investors penniless.
The suspicion that a Blue House official was involved in the process of suspending the redemption of the Lime Fund is widespread, which may be revealed in the course of future prosecution investigations. The key people involved in the Lime Fund are currently on the run, they may have distributed all of the funds to ruling party officials, and may have helped them profit in their investments by leaking undisclosed information on listed companies invested in by the Lime fund.
(4) Ongoing investigations
In the case of the Ulsan mayoral election fraud, the second public investigation department of the Seoul District Prosecutors’ Office, which indicted some of the people involved in the scandal in January, has continued to conduct further investigations and data analysis of related witnesses behind the scenes in preparation for the investigation of Moon’s former Chief of Staff, Lim, Jong-seok.
The Seoul Southern District Prosecutors’ Office is in charge of investigating the Sillajen and Lime scandals. In the case of Sillajen, the Southern District Prosecutors’ Office raided Sillajen in August of last year, and is investigating allegations that key executives used undisclosed information to illegally trade Sillajen shares on a large scale.
The prosecution requested arrest warrants for former CEO Lee, Yong-han and former auditor Kwak, Byung-han on April 10, and the Seoul Southern District Court issued arrest warrants for them on charges of violating the Capital Markets Act on April 17.
Meanwhile, MBC, one of Korea’s public broadcasters, reported rumors of a close relationship between a prosecution official and a TV news reporter. It appears that the rumor was manufactured in order to protect former leftist politician Ryu, Si-min, who is suspected of playing a role behind the scenes in the Sillajen scandal. This seems to be not a case of collusion between the prosecution and the media, but rather one of collusion between the Blue House and the media.
In the case of the Lime scandal, the 6th criminal division of the Southern District Prosecutors’ Office is currently investigating the whereabouts of former Lime Vice President Lee, Jong-pil, who fled when an arrest warrant was sought in November last year, and former Star Mobility Chairman Kim, Bong-hyun, who is suspected of having embezzled tens of billions of won from Lime funds. Two drivers who had helped Lee and Kim escape were recently arrested.
5. Countermeasures against the ruling camp’s scheme to bring down Yoon
During their campaigns, some of the ruling party’s candidates repeatedly vowed to investigate Yoon, Seok-yeol as the first case of the Civil Servant Corruption Investigations Unit. One of those was Choi, Kang-wook, a former presidential secretary for public discipline who was elected as a proportional representative. He was not just bluffing; it is something that can happen because the Civil Servant Corruption Investigations Unit is supposed to be able to investigate high-ranking government officials if they are sued or accused.
If a civic group linked to the ruling camp submits a complaint against Yoon, even without solid evidence, the head of the Civil Servant Corruption Investigations Unit may threaten to summon Yoon, and the left-wing media will exaggerate the situation and feature misleading reports in an attempt to deceive the public into believing that Yoon must step down.
Yoon, Seok-yeol’s own determination is an important factor in his standing up to those demanding his resignation, but his sheer determination may not be sufficient. If the groundless personal slander against him continues, public confidence in him may be shaken. Those who want to protect Yoon should support and defend him in a logical and consistent manner, tweet and share messages, and if necessary, confront his opponents with a counterattack.
When leftists, with the support of the current regime, launch attacks on Yoon’s integrity, not only conservative politicians but also conservative civic groups must push back and defend him. If the public wants an honest and diligent prosecutors’ office which is not swayed by political influence, all of the intelligent and conscientious forces in our society, including the media, academia and experts, should form a bulwark to defend him and thereby allow him to complete his term.
Yoon’s fellow prosecutors themselves should show more resoluteness in confronting government corruption with firm political neutrality and a fair exercise of prosecutorial power, especially now that the Moon administration has taken control of the legislature.
Dong-hyun Seok is the former chief of the Busan District Prosecutors’ Office, and the former chief of the Seoul Eastern District Prosecutors’ Office.Dong-hyeon SeokApril 20, 2020
