The decision by LS Group to reappoint Kim Won-kyu, the representative of LS SECURITIES, who was indicted on charges of receiving art and aiding in embezzlement by an executive, is believed to stem from the understanding of Kim's explanation. It is said that they judged there was a possibility of winning the case.
Kim is currently on trial at the Seoul Central District Court after being indicted in February on charges of receiving money and aiding in embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes. He is accused of buying a painting at a low price from Executive A and aiding A in misappropriating a loan of over 800 million won.
The prosecution considers that Kim bought a traditional moon jar worth 46 million won for 30 million won from Executive A, who was serving as the head of the real estate finance division in June 2021, and approved a loan of 79.5 billion won from LS SECURITIES to A. Earlier, in December of last year, the prosecution indicted A for using undisclosed job information to run a private business and misappropriating project financing funds totaling 83 billion won. The prosecution's judgment is that Kim received valuables related to his position and aided in the misappropriation of the loan.
Kim's third appointment as an internal director was confirmed in March of this year, right after his indictment. He initially took office as the representative of the predecessor, eBest Investment Securities, in 2019 and was reappointed in 2022, successfully achieving a third term. There had been speculation that Kim's reappointment was uncertain following the major shareholder of eBest Investment Securities changing from G&A Private Equity to LS Networks and officially integrating into LS Group, but he received reappointment despite the judicial risk.
LS Group exercises its control through a governance structure of 'Koo Ja-youl, chairman of LS Corporation → E1 → LS Networks → LS SECURITIES.' Koo Dong-hwi, the son of Chairman Koo, has participated as an outside director of LS SECURITIES since March.
According to LS Group, it decided on the third term after hearing an explanation regarding Kim's indictment and judging that there was a chance of winning in the trial. The problematic traditional moon jar painting is a work from the Karma series by artist Choi Young-wook. A bought Choi's painting in 2019 for 25 million won, and it is said that Kim purchased this painting for 30 million won from A in June 2021.
The prosecution assessed the painting's market value at 46 million won based on the fact that similar-sized paintings were sold at auctions for between 46 million and 48 million won, about 20 days after the sale date. Kim is reportedly expressing feelings of unfairness, stating that the painting's price at the time of purchase cannot be determined.
In reality, the auction prices of Choi's works in the Karma series of the same size vary. According to K Auction, a Karma work measuring '120x110cm' (from 2018) was auctioned on July 23, 2021, with an estimated price of between 18 million and 45 million won and fetched 46 million won. Another 2015 work of the same size (Karma 20152-43) was sold for 38 million won at K Auction in December 2022, and another work from 2018 (Karma 20189-13) fetched 36 million won this February.
For the Karma work measuring '51x46cm', the auction prices increased to 4.5 million won in October 2019, 6 million won in September 2020, and 17 million won in July 2021. A work of the same size was sold for 15 million won in an auction last May.
A representative of LS Group stated, "Given that the major shareholder has worked in the securities industry for over 40 years and has served as the representative of three securities firms, they seem to think that there is sufficient ground to contest the charges in court based on Kim's ability and character."
Kim and LS SECURITIES reportedly did not anticipate that there would be an indictment. At the time of the prosecution's indictment, LS SECURITIES denied the charges, stating, "There is no fact that Kim improperly received high-priced paintings from an executive in charge of specific business related to his duties or was aware of the misappropriation of the project financing loans for the special-purpose company related to that business. We plan to actively clarify the prosecution's claims during the trial process."