KTF CEO arrested

Cho Young-chu, CEO of No. 2 mobile carrier KTF, was arrested yesterday on bribery charges as the company is preparing to merge with its fixed-line parent KT this year.

Cho and other executives are suspected of taking kickbacks from equipment suppliers in return for business favors over the past three to four years.

Investigators are also looking into allegations that Cho may have used part of the money to bribe politicians including a key associate to former President Roh Moo-hyun.

The Seoul Central District Prosecutors` Office plans to bring breach of trust, bribery and embezzlement charges against him.

Investigators yesterday raided KTF`s headquarters in eastern Seoul and seized documents and computer hard drives. Prosecutors also recently banned the corporate boss from leaving the country.

KTF suppliers allegedly formed slush funds by inflating sales prices, handing the excess cash to KTF`s CEO and executives, prosecutors said. The head of one of the subcontractors was arrested Wednesday.

A KTF spokesperson said the company had no knowledge of the allegations.

Market watchers are closely following the investigation to see whether it will affect KTF`s planned merger with KT and other major business plans.

KTF is widely expected to merge with KT this year to better compete with SK Telecom, the top mobile carrier, and its fixed-line affiliate, Hanarotelecom.

By Jin Hyun-joo

(hjjin@heraldm.com)