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In connection with accounting fraud
Doosan's Construction Arm Searched

Mr. Park Yong-Sung
Prosecutors seized a large amount of documents and book during their search of the head office of Doosan Industrial Development Co., a construction subsidiary of the Doosan Group, over the weekend.

The house search was part of their ongoing investigation to determine whether the Doosan subsidiary manipulated their accounting records between 1995 and 2001. Prosecutors will also investigate allegations the company used 13.8 billion won (US$13 million) of its own slush funds to pay interest on private loans drawn by the family of Doosan Group Chairman Park Yong-sung.

The 65-year-old Park and 28 of his in-laws have been under investigation on charges of embezzlement. Doosan Group is the country's 10th-largest conglomerate.

The allegations of embezzlement were made to prosecutors by the children of former Doosan Chairman Park Yong-oh, the 69-year-old elder brother of incumbent Chairman Park Yong-sung, after he was expelled from the top Doosan post last month.

Yong-sung was named the group's new chairman at a family meeting on July 18, but the elder Park refused to step down, demanding that Doosan Industrial Development, the de facto holding company of the group, be spun off to be run by his own sons.

Yong-oh then accused his younger brother Yong-sung of operating a secret fund with company money to manage private organizations and to oppress the company's unionized employees.

Yong-oh and his children have since continued to submit evidence to prosecutors they claim shows that his younger siblings, current chairman and vice-chairmen of the group, have embezzled a massive amount of company funds.

Yong-sung, concurrently chairman of the Korea Chamber of Commerce and Industry, also holds a number of high-profile international positions, including membership on the International Olympic Committee and chairman of the International Chamber of Commerce.

In a related development, Doosan Industrial Development admitted on Aug. 8 that it had committed accounting fraud by inflating sales figures.

The company claimed competition and financial woes caused by the Asian financial crisis in late 1997 forced it to inflate sales figures from 1995 to 2001 by a total 279.7 billion won.

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