The prosecution launched on Tuesday a search and seizure over KH Group's alleged interference with bidding regarding the sale of a ski resort in Pyeongchang, as well as its role in supporting illegal cash transfers to North Korea.
The investigation led by the Seoul Central District Prosecutors' Office took place in about 20 locations, including offices of construction-to-electronics KH Group and state-run Gangwondo Development Corp., as well as houses of KH Group officials and former Gangwon Province Gov. Choi Moon-soon.
Two KH Group affiliates are accused of taking part in the bidding to acquire Alpensia Resort where the skiing competitions of the 2018 PyeongChang Winter Olympics were held. It was suspected that it was planned so either of them would be chosen to buy the resort without fair competition. Choi, a journalist-turned-bureaucrat, was then the Gangwon Province governor who approved the sale.
One of the two bidders, KH Gangwon Development, purchased the resort for 711.5 billion won ($561.9 million) in August 2021, two months after the bidding was complete. Gangwon Province spent over 1.6 trillion won on the resort to host the Winter Olympics.
A complaint over the bidding was filed by think tank Kangwon Peace Economy Institute to the antitrust authorities in July 2021, and to the police in August 2021. The police referred the case to prosecutors in November.
An act of interference with bidding is a breach of the Criminal Act. Such act is punishable by a prison term for not more than two years or a fine not exceeding 7 million won.
All eyes are on whether the Seoul prosecutors' office, joined by the Suwon District Prosecutors' Office, will widen the probe to look into KH Group's alleged currency smuggling into North Korea, a violation of the Foreign Exchange Transactions Act.
Prosecutors in Suwon, Gyeonggi Provice, are looking to seize materials related to KH Group's North Korean project with nongovernmental organization Asia Pacific Exchange Association (APEA) and underwear maker Ssangbangwool during the former Moon Jae-in administration.
KH Group and Ssangbangwool are suspected of having jointly donated $2 million to the NGO from 2018 to 2020, while the money was smuggled to North Korea via China, prosecutors said.
The APEA is also accused of illegally contributing to the presidential campaign of former Gyeonggi Province Gov. Lee Jae-myung this year. During Lee's tenure as governor, APEA was selected to manage inter-Korean projects involving Gyeonggi Province.
(consnow@heraldcorp.com)
