Special counsel investigating ex-first lady faces own capital gains probe

Special Counsel Min Joong-ki, who is leading the investigation into former first lady Kim Keon Hee, faces a possible investigation over capital gains earned by selling shares in a company at the center of stock manipulation allegations tied to Kim

Special Counsel Min Joong-ki delivers remarks on July 2 after unveiling a nameplate at the special counsel’s office central Seoul. [NEWS1]

Special Counsel Min Joong-ki, who is leading the investigation into former first lady Kim Keon Hee, faces a possible investigation after reportedly earning nearly 100 million won ($70,000) in capital gains by selling shares in Neo Semitech, a company at the center of stock manipulation allegations tied to Kim, shortly before it was delisted.

The People Power Party (PPP) announced plans to file a report against Min to the authorities, accusing him of using nonpublic information in trades involving the solar components company and describing the case as “hypocrisy and illegality.”

The complaint will also include allegations that the special counsel team pressured a Yangpyeong County official who later died by suicide after questioning by the counsel, a case the PPP says involved coercive questioning and attempts to manipulate testimony.

Neo Semitech was delisted from the Kosdaq market in 2010 after accounting fraud was discovered. About 7,000 investors lost a combined 400 billion won. Former CEO Oh Myung-hwan reportedly sold about 2.4 billion won in shares in borrowed names after being notified of an audit and was later sentenced to 11 years in prison in 2016.

The case resurfaced after prosecutors investigating Kim, the wife of former President Yoon Suk Yeol, looked into her 2009 investment in Neo Semitech’s bonds. She is accused of benefiting from short-selling the day before the listing. Although the issue did not appear in her indictment this August, reports later revealed that Special Counsel Min also invested in Neo Semitech and sold the shares at nearly three times their original value.

Former first lady Kim Keon Hee leaves the special counsel’s office in central Seoul after being questioned on Aug. 6. [NEWS1]

At the time, Min was serving as a senior judge on the Seoul High Court. He is an alumnus of both the high school and the university attended by Oh, who went to Daejeon High School and Seoul National University with Min. Former prosecutor Yang Jae-taek, who served as an outside director of Neo Semitech, also graduated from the same schools and was Min’s classmate in the 14th class of the Judicial Research and Training Institute.

Following media reports, the special counsel’s office acknowledged that Min invested about 30 million won in the early 2000s and sold the shares in 2010 for roughly 130 million won. Min argued that a personal acquaintance, not a company source, recommended the investment, and that he sold the shares just before the company’s delisting based on advice from a brokerage employee.

However, he did not disclose any details about the broker who allegedly recommended the sale, nor did he reveal the exact timing of the transaction. He also declined to comment on his relationship with Oh.

If Min sold the shares between Feb. 26, 2010, when Oh became aware of the company’s accounting fraud, and March 24, when the stock was suspended, the timing aligns with a period of undisclosed material information, which could raise questions about his personal ethics and the integrity of the investigation he is leading.

“This is an unprecedented situation where the special counsel and the subject of the investigation are facing the same allegations,” said Rep. Park Sung-hoon, senior spokesperson for the PPP, in a statement on Saturday. “The very hand that scrutinized someone else’s stock dealings ended up profiting from the same company. He has already forfeited his eligibility to serve as special counsel.”

BY JEONG JIN-WOO [paik.jihwan@joongang.co.kr]