Chris Kim’s Detention Extended Till December 5

Chris Kim, the main figure in the BBK stock price manipulation probe, will have to stay ten more days in prison before he is officially indicted. The DA’s office was supposed to indict him by yesterday, but moved for a continuance.

During the extended time, the prosecution plans to look into allegations that Grand National Party candidate Lee Myung-bak was involved in the BBK fraud.

The authorities have obtained the official seal management files of LKe Bank, which Kim and Lee founded together in February 2000. The prosecution is checking the impression of Lee’s official seal on the file with the impression on an agreement in Korean that Chris produced and submitted.

Defense counsel Oh Jae-won told reporters yesterday, “In the file, Kim and Lee recorded their own seal impressions. The impressions on the corporate record seem identical to those on the agreement.”

Lee’s campaign rebutted the claim, saying, “Mr. Lee issued a general power of attorney concerning the foundation of the stock brokerage EBK Securities. It seems that Kim had Lee’s seal copied sometime after April 24, 2000.”

Snowballing amounts of embezzlement–

In 2004, when Korean prosecutors first demanded U.S. federal authorities extradite Kim, he was wanted for the embezzlement of 38.4 billion won (roughly $40 million). As the investigation deepens, the authorities have discovered more embezzlement, undiscovered previously due to difficulties in tracking banking records.

Kim embezzled an extra 9.1 billion won according to prosecutors. He nominally returned 1.1 billion won to Das, Inc. in November 2001, and 2.4 billion won to Sim Tech, which were not previously detected by the law enforcement agency. Further, Kim paid 5.6 billion won as severance fee to a former American CEO in March 2002.

In the meantime, the DA’s office questioned managing officers of auto parts maker Das twice until yesterday to find out why the company invested 19 billion won in BBK in 2000. Candidate Lee’s brother and brother-in-law are major shareholders of Das.

Controversy over per-share value–

According to the Korean agreement produced by Chris Kim, Lee allegedly sold 610,000 BBK shares to Kim for 4,999,995,000 won.

Translating that into a per-share value, the price amounts to 8,196.713 … won per share, a figure with long decimal places. When trading shares, a fixed value (e.g. 5,000 won) is given first to a share. Then, the total number of the shares is multiplied by the value. Thus, the sales price does not include decimals.

A prosecutor turned attorney confirmed, “I have never seen a per-share price with 27 decimal places.”

Still, some financial specialists do not exclude the possibility.

Was the sales price payment from AM Papas for a stock sale?–

Candidate Lee’s campaign attributes the abnormal per-share price to Chris Kim’s manipulation. According to the campaign, Kim distorted facts to take advantage of a one-time share exchange between Lee and Kim. On February 28, 2001, Lee and Kim entered into an agreement, authorizing the sale of 333,333 shares and 333,334 shares, respectively, of LKe Bank to AM Papas.

The sales agreement was to raise the capital to found a securities company “EBK Securities.”

As payment for the sale, Lee received 4,999,995,000 won from AM Papas on February 28, 2001. One month later, Kim received 5.01 billion won from the company. The agreement revoked the sale and mandated return of the money if the securities company had not been established within 6 months.

The Financial Supervisory Service did not allow the foundation, and, therefore, the securities firm “EBK” was not founded. Accordingly, on June 23, 2001, after deducting some expenses, 9.6 billion won, which was reserved for the capital of EBK, was wired to AM Papas.