The prosecution has charged employees of Korea Investment & Securities with facilitating unregistered lending worth tens of millions of won to a real estate project financing (PF) company.
The Anti-Corruption Investigation Division 3 of the Seoul Central District Prosecutors’ Office stated on the 24th that they have charged eight individuals, including Bang, head of the PF division at Korea Investment & Securities (currently the group leader), Jo, an employee of the PF division, and Kim, an operator of an unregistered lending company, without detention for violating the Special Act on Certain Economic Crimes.
Bang and Jo are accused of mediating the lending from the unregistered lending company operated by Kim while providing initial business funds to Company A, a real estate PF project company of Hanwha Securities, from February to July 2021. This company charged interest rates exceeding 100% annually.
They arranged loans to the company under the 'one plus one (1+1)' condition. This method entails lending business funds to a company struggling with financing at tremendous interest rates comparable to the principal amount.
Company A requested more than 3 billion won, which is the lending limit set by the PF division of Hanwha Securities, while borrowing initial project costs. They took advantage of this and facilitated lending of 2 billion won through an unregistered lending company. The interest paid by the project company is reported to have reached approximately 2.2 billion won.
They also arranged a total of 6.2 billion won in loans for five project companies, including Company A, through the unregistered lending company. It has been investigated that Korea Investment & Securities repeatedly arranged unregistered lending actions related to project companies, receiving substantial commissions from Company A.
The prosecution views that this lending practice has resulted in illegal excessive interest being paid, which should have been used for real estate PF funds intended for the project. They plan to respond strictly to related crimes, claiming that this is deteriorating project operations and facilitating the rampant presence of indiscriminate project companies and illegal lenders.