South Korean prosecutors on Tuesday raided the offices of SK Networks on embezzlement allegations by its chief executive.

Investigators searched SK Networks’ headquarters in central Seoul, the residence of CEO Chey Shin-won and the offices of key affiliates including SKC and SK Telesys.

Prosecutors are probing allegations that Chey had for years embezzled company money to create slush funds.

Shares of SK Networks fell 0.21 percent to finish Wednesday at 4,650 won ($4).

Chey is the second son of the late SK Group founder and elder cousin of SK Group Chairman Chey Tae-won. SK Networks is a general trading company under Korea’s third-largest conglomerate SK Group.

The prosecution received an inquiry from the Korea Financial Intelligence Unit (FIU), which detected 20 billion won of suspicious financial transactions flowing from SK Networks in 2018.

Chey is accused of creating illicit funds from affiliates and funneling the money overseas. He was spotted carrying a big stash of cash whenever he traveled abroad, according to investigations.

Chey is also facing charges of misappropriating funds by lending money without collateral and saying it was not returned, marking the uncollected expenses as bad debt.

SK Networks said it had “no idea about any of the allegations” and was “looking into the claims,” adding that it would “fully cooperate with prosecutors in the investigation.”

By Pulse

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