The source of the funds that the three sons of Minister nominee Lee Hye-hoon of the Ministry of Planning and Budget invested in a lend company's corporate bonds was confirmed to be 350 million won in cash that the nominee's spouse gifted to the three sons. Until now, the nominee had not made clear the source of the investment funds.
According to the National Assembly and the Ministry of Planning and Budget on the 20th, the nominee submitted documents related to the three sons' lend company investments on the 18th. The documents state that the nominee's three sons received a total of 350 million won in cash as gifts from 2010 to 2016 from their father and the nominee's spouse.
The eldest son received 150 million won over three occasions on Nov. 15, 2010, Apr. 10, 2013, and Jul. 28, 2016. The second son also received 150 million won over three occasions during the same period. The third son received 55 million won once on Apr. 10, 2013. They were born in 1991, 1993, and 1997, respectively. Some of the gifts were received while they were minors. They reportedly paid 21.5 million won in taxes on the total amount of gifts.
In documents submitted to the National Assembly, the nominee said, "(The nominee's) spouse gave cash several times to the sons starting in 2010, and through that cash and financial income, (the three sons) purchased the lend company's corporate bonds." The person who recommended the three sons invest in the lend company's corporate bonds was also the nominee's spouse.
The nominee's three sons acquired 17 shares of a lend company's corporate bonds for 170 million won in Apr. 2016. The eldest bought 7 shares for 70 million won, and the second and third sons each acquired 5 shares for 50 million won.
Three months later, in Jul. 2016, the three sons made additional investments. The eldest and second sons each invested 20 million won to acquire 2 more shares. In Apr. 2017, the eldest acquired 3 additional shares, the second 4, and the third 2.
In this way, the total number of corporate bond shares held by the nominee's three sons was 30, with an investment principal of 300 million won. The corporate bond's yield was set at 9% per year.
However, when the lend company that issued the corporate bonds failed to pay interest properly, the nominee's spouse reportedly purchased the bonds from the three sons. A financial industry source said, "After the father gifted the funds to the three sons for investment and no investment revenue materialized, he effectively helped them recover the principal by buying the bonds."
The nominee said, "The company in question is a case that invested in a Fintech software development firm and failed, and to my knowledge it never engaged in lending to low-income people or small business owners," adding, "Since Jan. 2017, not only the interest but effectively the principal of the corporate bonds has been lost."
Choi Bo-yoon, senior spokesperson of the People Power Party, said in a commentary that day, "The suspicions surrounding the nominee not only stray far from the public's common sense and moral standards but also raise serious allegations of illegal and improper conduct." Choi added, "A Cabinet member responsible for finance and budgeting is held to the highest standards of integrity and public accountability," and said, "The nominee has failed to secure even the minimum trust required of a public official, let alone a Minister."