Prosecutors Dismiss Baek’s Claims, Condemn Biased Investigation

South Korean prosecutors have firmly rejected allegations made by Lee Baek, dismissing his claims that the ongoing investigation against him shows political bias or procedural irregularities. The case has drawn significant public attention as it involves one of the country’s most prominent business figures.

In a statement released yesterday, the Seoul Central District Prosecutors’ Office characterized Baek’s accusations as “baseless attempts to undermine the integrity of the legal process.” The prosecutors emphasized that their investigation follows standard protocols and is based solely on evidence rather than political considerations.

“Every aspect of this investigation adheres to established legal procedures,” said Chief Prosecutor Kim Min-ho. “The suggestion that our office is pursuing this case for political reasons is categorically false and potentially damages public trust in our judicial system.”

The investigation centers on allegations that Baek, the chairman of Hanyang Group, one of South Korea’s largest conglomerates, orchestrated a complex accounting fraud scheme that allegedly misrepresented the company’s financial position to investors between 2018 and 2021. Prosecutors claim to have uncovered documentation suggesting that approximately 3.7 trillion won (approximately $2.8 billion) in company assets were improperly recorded.

Market analysts have been closely monitoring the case, as Hanyang Group’s subsidiaries span several crucial sectors of the South Korean economy, including electronics manufacturing, telecommunications, and construction. The group’s shares have declined nearly 14% since the investigation became public last month.

“This case represents one of the most significant corporate governance investigations in recent years,” noted Park Sun-ji, an economic crime specialist at Seoul National University. “The implications extend beyond a single executive to questions about oversight mechanisms within Korea’s largest business entities.”

The legal battle has intensified in recent weeks after Baek’s legal team filed a motion claiming prosecutorial misconduct, specifically alleging that evidence was being selectively presented and that witness testimony was improperly influenced. These allegations prompted yesterday’s unusual public response from the prosecution office.

Prosecutors detailed their investigation methods in the statement, explaining that they have interviewed 47 witnesses, including former and current Hanyang executives, and collected over 100,000 documents related to the company’s financial operations. They also noted that search warrants were obtained through proper judicial channels with appropriate supervision.

The Financial Services Commission, South Korea’s financial regulator, has launched its own parallel investigation into Hanyang Group’s accounting practices. The case highlights ongoing tensions in South Korea between powerful business conglomerates, known as chaebols, and government regulatory bodies.

Economic reform advocates have pointed to the case as evidence of the need for stronger corporate governance standards. “The relationship between major business groups and regulatory oversight has been a persistent challenge in Korea’s economic development,” said Lee Ji-young, director of the Corporate Accountability Center, a Seoul-based watchdog organization.

South Korea’s business community has been divided in its response. Some industry leaders have privately expressed concern about what they view as increasingly aggressive prosecutorial tactics, while others acknowledge the importance of transparency in maintaining investor confidence in the market.

The case comes amid broader economic challenges for South Korea, as the country navigates global supply chain disruptions and increasing competition in the technology sector, where many of Hanyang’s subsidiaries operate.

Legal experts suggest the case could potentially last several months before reaching a conclusion. If convicted, Baek could face up to 10 years in prison under South Korea’s Corporate Financial Transparency Act, which was strengthened in 2019 following several high-profile accounting scandals.

The prosecution has scheduled a press conference for next week to provide additional details about the investigation’s progress. Meanwhile, Baek’s representatives have indicated they plan to file additional motions challenging the investigation’s foundation.

International investors, who hold approximately 27% of Hanyang Group’s publicly traded shares, are watching closely as the case unfolds, with potential implications for foreign investment confidence in South Korea’s corporate sector.