Suspicion of inflating coil quantity and rent… 3 billion won special price fraud ‘not forwarded’

Dispute over method of calculating production quantity... “It is difficult to determine deceptive behavior”
Police “lack of objective evidence to prove collusion and deception”

It was suspected that people in the business relationship conspired to manipulate transaction statements and falsely charge warehouse rent to swindle large sums of transaction money, but the charges were dropped after a police investigation.

Last January, the Busan Police Agency decided not to forward five people, including Mr. A, who were suspected of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud).

Mr. A, a former executive of an automobile parts company, was accused of conspiring with partner company officials over a five-year period starting in 2020 to submit transaction statements to the parts company that inflated the coil production quantity, and defrauding the company of approximately 3.1 billion won by overcharging warehouse rent and management costs.

They completely denied the charges. The production quantity cannot be judged on a single basis as it is produced by mixing several product numbers, and since raw materials were purchased and used separately from outside in addition to the coils supplied, a simple comparison cannot determine overestimation. In addition, he explained that warehouse costs have been customarily settled at an amount that includes not only rent but also incidental costs such as forklift costs and management fees.

The police decided not to send the case. This is because it is difficult to prove the deceptive actions of Mr. A and others with only the submitted data. The police explained, “The number of parts that can be produced per 1 kg of coil is set, but we took into account the fact that there are multiple parts instead of one, the unit price per part changes every year, and the fact that the number of products sold by the auto parts company is greater than the number of parts actually received from partner companies.”

Attorney Kim Young-heum of Daeryun Law Firm, which represented the suspects, pointed out, “This case occurred during a transaction process in which dozens of practitioners participated over a period of five years, and it is close to impossible in terms of logistics and accounting systems to have continued the large-scale fraud secretly for a long period of time, as the plaintiff claimed.” He added, “The intention of deception cannot be determined simply by comparing the amount of raw materials supplied and the production of parts. In particular, considering the settlement procedure approved by the final approval authority and the external raw material supply and demand situation, it is difficult to meet the requirements for criminal fraud.”

Reporter Kim Hee-guk kukie@kookje.co.kr

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Suspicion of inflating coil quantity and rent... 3 billion won special price fraud ‘not sent’ (link)