CEO of Korea`s top tobacco company resigns amid slush fund investigation

CEO of Korea`s top tobacco company resigns amid slush fund investigation. July. 30, 2015 07:20. taeho@donga.com.

Min Young-jin, the CEO of KT&G, Korea`s largest tobacco maker, has offered to resign Wednesday, with seven months left in his term.

KT&G said that Min offered to resign at a board of directors` meeting, asking board members to initiate a selection process for a new CEO. The company added that he did not explain why he is stepping down. A former official of the now-defunct Monopoly Bureau, Min has took the helms of KT&G in 2010 under the Lee Myung-bak administration and was reappointed as the company`s CEO in 2013.

It is predominantly believed that Min suddenly offered to step down because of an ongoing investigation into his alleged slush funds. The Seoul Central District Prosecutors` Office has been conducting an extensive probe into the finances of Min and other senior KT&G officials. Investigators suspect that he raised slush funds via the company`s transactions with its subsidiaries including KGC Life and Gin Co., Somang Cosmetics and KT&G Life Sciences Corp.

Prosecutors plan to summon those involved in the case as soon as they finish tracking down the bank accounts of Min and other KT&G officials. If Min`s alleged embezzlement is verified, prosecutors are expected to expand the probe to whether influential figures of the Lee administration were involved in Min`s reappointment of KT&C chief.

In 2013, Min faced an investigation over suspicions that he caused losses to his company by paying an "excessive" amount of fees to a contractor while carrying out a real-estate project but was cleared of the suspicion in August 2014.

Once a state-run tobacco and ginseng monopoly, KT&G is now a privatized entity, in which the National Pension Service is the largest shareholder with a 7.05 percent stake, followed by Industrial Bank of Korea owning a 6.93 percent stake. During his term in office, Min increased tobacco exports to more than half of the company`s revenues but showed poor performances in developing new businesses such as cosmetics and tree nursery.