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$3b export fraud: Korean Customs arrests Moneual company CEO, 13 employees

$3b export fraud: Korean Customs arrests Moneual company CEO, 13 employees

KOREA: Korean Customs Authority unveiled CEO Park Hong-Seok plus two executives and 13 mid-level employees of Moneual Company involved in submitting artificial export documents for home appliances worth more than 3.2 trillion won ($3 billion).

The customs office began its initial investigation into Moneual in August when a whistle-blower reported the fraudulent activities. The issue resurfaced when the vacuum robot developer filed for court receivership last Monday at Suwon District Court. The company recorded 1 trillion won in annual revenue last year and has received praise from Bill Gates.

Over the six years, Moneual reported exports of 3.2 trillion won worth of home theater PCs, a device considered outdated.

We are regretful [of this situation]. It is strange that a company would record multiple trillions of won in exports simply from one outdated product,” Han Seong-il, head of the investigation team, said at the briefing.

According to the customs office and the financial industry, “Moneual borrowed a total of 3.2 trillion won from 10 banks over the past six years. The Industrial Bank of Korea and the Korea Development Bank was the two biggest lenders, industry sources said. Of the 3.2 trillion won the company has taken out, it has yet to pay back 674.5 billion won,” the customs agency said. CEO Park said during the investigation that the fraud dates back to 2007 when a U.S.-based business partner returned a shipment of home theater PCs, causing a financial crisis at the Korean company. The executive figured out that Moneual could re-export the low-quality PCs to China and Hong Kong, which allowed the company to continue to borrow money from Korean banks.

Park spent 24 billion won on lobbying the brokers who made connections between Moneual and the Chinese conglomerates, buying another factory in China, and on maintaining his private property. He spent another 12 billion won to purchase properties in Gangnam District and Jeju Island, and on gambling and personal investments.