By Jung Min-ho – The Korea Times

July 7, 2013

SEOUL,— Prosecutors and financial regulators are investigating UI Energy CEO Choi Kyu-sun, a convicted high-stakes international broker, over suspicions that he conspired with the Kurdistan government to embezzle $30 million in corporate funds.

A source at the Seoul Central District Prosecutor’s office said Choi apparently obtained the money from the Kurdistan Regional Government (KRG) in the autonomous region in northern Iraq.

Choi has claimed that the money came from the Nokan Group, a firm based in Kurdistan, which is owned by the Patriotic Union of Kurdistan (PUK) led by the current Iraqi President, Jalal Talabani.

The prosecutor’s office contacted the Department of Foreign Relations at the Kurdistan Regional government over a seven month period beginning in November last year, but no response of any sort has been issued.

The source also said that Choi’s close links with high-ranking KRG officials, including Kurdistan Prime Minister Nechirvan Barzani, are obstructing their efforts to gather evidence.

The source said that Choi’s close relationship with the Nokan Group and PUK is preventing them from establishing where Choi obtained the money.

Choi is no stranger to controversy. He was convicted in 2003 and sentenced to two years in prison after a high-profile corruption scandal involving other people bidding to run the national sports lottery. Among them was a son of then-President Kim Dae-jung. Choi was an assistant to the deceased former president when he was seeking office in 1997.

In the current case, prosecutors allege that Choi embezzled the $30 million after UI Energy inked a contract to build a 306-mega-watt packaged power station (PPS) in Kurdistan in 2007. They believe the company pulled out of the PPS project before it was finished.

In a separate case, first reported by The Korea Times last month, UI enc, was ordered to pay the Kurdish Ministry of Health $22 million after failing to fulfill a contract to build a hospital in Sulaimaniyah, a city in Kurdistan.

A regional court imposed the multimillion dollar fine on UI enc, although no representative from the company ever appeared in court. No date was set stipulating when the fine should be paid, leading to speculation that the KRG is somehow helping Choi.

“The company has dirty deals and no one can force them to pay a single dollar. I know their previous legal representative here told the company not to attend the trial at all,” said Falah Murad Khan Shakarm, project coordinator of the Wadi Organization, a human rights group working in Iraq.

“The KRG knew that they could not get the money back because they also made many mistakes but they took this issue to court because of public pressure.”

“The KRG repeatedly dedicated more funds to the project. We have evidence that those funds were allocated to other purposes rather than building the hospital,” Goran Abdulla Sabir Zangana,www.ekurd.net a local doctor and a representative of the Federation of Civil Society Organizations in Kurdistan, said.

According to another source, KRG officials are not only utilizing health sector trading for their own interests but such projects have become vehicles for corruption and pilfering of public funds and other resources.

“To hide their vicious conduct, they conceal their partners and companion companies in order to hide their corrupt dossiers under their names,” the source said on condition of anonymity.

The KRG received its funds from the Iraqi Federal Government with about 90 percent of this coming from oil profits.

The investigation was initiated by the Security & Futures Commission in May last year after UI Energy omitted the money from its accounts, which resulted in the company being delisted by the Korea Exchange.