Prosecutors raid KT in widening rebate probe

SEOUL, Oct. 16 (Yonhap) -- South Korea's largest fixed-line operator, KT Co., was bracing itself Thursday as prosecutors widened their probe into kickback allegations, raiding the company's headquarters and the home of its chief.

Scores of investigators confiscated computer hard disks and accounting books at
KT's headquarters in Seongnam, south of Seoul, and at its office in the capital.
They also combed over the residence of Nam Joong-soo, the company's president.
"They came all of a sudden, but we will cooperate as much as we can. We expect
the probe will be completed soon and our business will not be disturbed," said
Kim Young-wan, a KT spokesman.
Prosecutors have been looking into allegations that Nam had taken rebates from
subcontractors while heading KTF co., a KT affiliate and the country's
second-largest mobile carrier, from 2003 to 2005.
The probe first began with Nam's successor at KTF, Cho Young-joo, after
allegations surfaced that he had routinely pocketed kickbacks from subcontractors
using bank accounts opened under borrowed names.
Cho resigned as KTF president in the wake of the probe, and was indicted last
week for allegedly taking 2.4 billion won (US$1.8 million) in rebates. Top
management officials also offered to resign en masse.
The corruption probe initially prompted allegations that the executives might
have used the kickbacks to bribe politicians. Prosecutors said they have found no
evidence yet to support that theory.
The probe has dealt a blow to both KT and KTF as they strive to increase their
market share over rivals. The two are preparing to merge later this year ahead of
KT's launch of an Internet Protocol Television (IPTV) service, which the company
hopes will offset its declining fixed-line phone business.