South Korean police on Monday filed an arrest warrant for KT Corp. Chairman Hwang Chang-gyu and three other former and incumbent employees for their alleged involvement in providing illicit political donations to lawmakers from 2014 to 2017.

The Seoul Metropolitan Police Agency said on Monday that it requested a warrant to arrest four former and incumbent KT employees including its chairman Hwang as they are suspected of having used 441.9 million won ($399,477) worth of company funds to provide illegal political donations to 99 legislators of the 19th and 20th National Assembly between May 2014 and October last year.

It is the first time for the police to file an arrest warrant for an incumbent KT CEO since the country’s leading mobile carrier was privatized in 2002. The request comes after the police questioned Hwang on the suspicious donations in April.

The latest development has come as a surprise to KT employees at a time when the company is busy in readying to commercialize the fifth-generation (5G) wireless network by next year and win the frequency auction of the country’s first 5G network contested by rivals SK Telecom Co. and LG UPlus Corp.

KT said in a statement that its CEO has not given any directions with regard to the latest development. The company said that it will cooperate with the investigators.

If KT Chairman Hwang is arrested, the mobile carrier will face a leadership vacuum, dealing a major blow to its future growth businesses such as those involving 5G network, industry observers said. It is also happening at a critical moment when the company needs to establish new strategies ahead of the abolition of the country’s pay TV operator regulation that bans the market share of a single operator from exceeding 33.3 percent.

Considering it, industry sources from the conglomerate circle predicted that Hwang may voluntarily resign, just like former Posco Chairman Kwon Oh-joon who offered to step down in April after being given a second term amid allegations over Posco’s involvement in the nationwide state affairs meddling scandal that ousted former President Park Geun-hye from office. KT Chairman Hwang, however, has been actively involved in management and dismissed the possibility of him stepping down.

It is not new for a CEO of KT, which was once a state-owned telecommunications company, to step down after a new administration enters office. Former KT CEOs who were successfully appointed to serve second terms had never completed their second term due to prosecutors’ investigation with the launch of the new government. Former CEO Lee Suk-chae voluntarily resigned in November 2013, almost two years after he began serving his second term and ahead of prosecutorial questioning. Former CEO Nam Joong-soo also resigned in November 2008 after serving eight months on his second term as he was arrested over allegations over a bribery scandal.

By Seo Dong-cheol and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]