Ex-Samsung Employees Served as Proxies of Ex-Mongolian PM

2021년 06월 04일 19시 50분

A British Virgin Islands-based company in 2006 bought two luxury apartments in Knightsbridge, a wealthy neighborhood of London, for £850,000 and £4.21 million, respectively.
Later in November 2017, the company, named Premier Edge Limited, sold off one of the units to a third party for £1.85 million, netting £1 million just from the sale. And the company gave away the other unit in 2018, evaluated to be worth about £10.5 million at that time, to another company called Lorsch Limited, also based in the British Virgin Islands.
British and U.S. court documents reviewed by Korea Center for Investigative Journalism (KCIJ)-Newstapa allege that Premier Edge and Lorsch Limited were shell companies.  Transactions like this using shell companies are a typical scheme used to hide real sellers and buyers of the financial transactions and to divert assets overseas. Such shell companies are often based in tax havens like the British Virgin Islands.
According to the court documents, several Korean nationals, including former employees of Samsung C&T, were involved in such transactions. 
In November 2020, the Business and Property Courts of England and Wales ordered Lorsch Limited to freeze its assets, essentially preventing the company from selling its properties. According to exhibits submitted in the case, a Korean national named Cheong Choo-young served as a director of Premier Edge, and was the authorized signatory for both Premier Edge and Lorsch.
▲ Cheong Choo-young is suspected to have his name on the two BVI-based shell companies as a front man for the real owner Batbold. Source: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
But KCIJ-Newstapa’s review of financial documents and court records suggests that Cheong wasn't the real owner of the shell companies. 
Premier Edge Limited appears to have been established and managed by the request of Sukhbaatar Batbold, the former Prime Minister of Mongolia, ultimately. 
The court documents showed that the Deutsche Bank’s trust services provider arm acted as an agent to settle a trust named Quantum Lake Trust, and make it indirectly own Premier Edge.
▲ A Deutsche Bank letter in March 2006 wrote that Batbold wished to settle Quantum Lake Trust. This trust indirectly owned Premier Edge. Source: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
▲ A copy of Batbold’s passport was attached at the email between Deutsche Bank and the corporate service agency, to confirm that Batbold settled Quantum Lake Trust. This trust indirectly owned Premier Edge. Source: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
▲ An email sent from a Deutsche Bank staff to a corporate service agent showed that Quantum Lake Trust, which was settled by Batbold, indirectly owns Premier Edge. Source: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
According to the Premier Edge records of registered members, Batbold appeared to be the company’s incorporation member as of August 2005 with a single share. He removed his name from this list by transferring his share to Regula Limited in April 2006. 
Regula is a nominee company, which Deutsche Bank widely used to manage its clients’ shell companies, the International Consortium of Investigative Journalists (ICIJ) uncovered at its Panama Papers investigation in 2016. 
Regula invited Batbold’s eldest son Battushig Batbold as Premier Edge’s member in June 2015 by transferring a share. In October 2015, Premier Edge allotted 85 shares to Battushig. He transferred all shares he had to Lorsch Limited on August 8, 2016. On the same day, Cheong was appointed a director of Premier Edge.
▲ The list of registered members of Premier Edge includes Sukhbaatar Batbold himself, his eldest son Battushig, and Deutsche Bank’s nominee company Regula Limited. Source: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
▲ Cheong Choo-young later joined as a director of Premier Edge in August 2016. Source: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
Based on a complex relationship which Deutsche Bank structured among Batbold, his children and Cheong, Cheong appeared to become a proxy of the former Mongolian Prime Minister and traded London apartments on behalf of him, by putting himself as a front man of Premier Edge and Lorsch.
A person who lends his or her name as an executive or shareholder of a shell company to hide the real owner is called a "proxy."
Courts in the U.K., Hong Kong and Singapore in November last year froze assets of multiple other shell companies connected to Batbold, Cheong and other Korean proxies as well. 
KCIJ-Newstapa found that Cheong Choo-young was a former head of the Samsung C&T Mongolia branch.
▲ Sukhbaatar Batbold, former Prime Minister of Mongolia, is suspected of managing and hiding suspicious money with proxies from Mongolia and Korea. 
Batbold is accused of using shell companies to trade minerals from Mongolia's state-owned mines through shell companies and hiding money from these companies abroad. And he allegedly did so through borrowing the names of several former Samsung C&T employees, including Cheong, court documents say.
Based on court documents, KCIJ-Newstapa identified at least 13 Korean nationals that appear to have lent their names as Batbold’s proxies, including five former employees of Samsung C&T and other individuals linked to Cheong Choo-young.
They are currently embroiled in civil lawsuits brought by the Mongolian Government Agency for Policy Coordination on State Property and Mongolian state-run mining companies Erdenet and Oyu Tolgoi in November last year to the courts in Mongolia and the United States. 

Ex-Samsung C&T Mongolian branch head served as a link

According to court documents, Cheong Choo-young, a former Samsung C&T employee, brought himself, his family and his former Samsung colleagues to the proxy network to manage Batbold’s properties overseas. 
From 1987, Cheong worked for Samsung C&T’s metal team for nearly 20 years. Since February 2007, shortly after he left Samsung C&T, he and his wife have been involved in moving and managing the former Mongolian prime minister’s assets overseas.
Cheong’s name was listed as an executive for at least 28 shell companies in known tax havens like the British Virgin Islands and Hong Kong, established on behalf of either Batbold or his children, documents show. Cheong allegedly introduced his former colleagues at Samsung C&T and other individuals connected to himself to the business of managing Batbold’s shell companies, according to the court documents.

Mining trades and real estate purchases  

The shell companies fronted by Cheong and others linked to him purchased properties around the world on behalf of the Batbold family. In addition to Premier Edge Limited and Lorsch Limited buying and selling the two luxury apartments in London, their other alleged shell companies bought and sold apartments in New York and elsewhere in the U.S., the documents show.
Former Samsung C&T employees also allegedly purchased copper from Mongolia's state-run mines and sold them to another company, according to the court documents.
Mongolia boasts the second largest copper reserves in the world.
According to the court documents, Batbold had his proxies allegedly set up shell companies in the British Virgin Islands and Hong Kong through proxies during his tenure as Mongolia’s prime minister, and used them to buy a large volume of copper from his country's leading mine, Erdenet. The shell companies then resold it to third party companies, through contracts represented by proxies.
▲ Batbold's proxies put their names to offshore shell companies. These companies purchased minerals from a Mongolian state-run mine, and resold them to third-party companies. Some of the companies' money was sent to bank accounts that belonged to Cheong and a Mongolian proxy.
Catrison Limited, fronted by Cheong’s wife Kim and a fellow former Samsung C&T employee was among such alleged shell companies. In 2011 alone, Cartrison signed two contracts with the Mongolian mining company Erdenet to purchase copper worth a total of US $93 million, and then resold it to a company named Ocean Partners UK Limited (OPUK), financial documents show. Other than the two contracts with Catrison, Erdenet had allegedly sold minerals directly to OPUK with no involvement from an intermediary like Catrison, according to the court documents.
At least three other alleged shell companies engaged in similar operations. Kang, Cheong’s close past colleague from Samsung C&T’s metal team fronted an entity named Genetrade, while Cheong’s wife was indirectly involved in another named Cliveden Trading AG. Cheong Choo-young himself was listed as an officer of a Hong Kong company named Lidex Holdings Limited.
Batbold's alleged proxies engaged in transactions shortly after launching the companies. Genetrade, a British Virgin Islands company established on Nov. 9, 2010, purchased a total of US $68 million worth of molybdenum over two contracts on Dec. 24, 2010 and on Dec. 6, 2011, respectively.
The companies were also used to transfer money to the bank accounts of Cheong and Batbold's Mongolian proxies. A Hong Kong-based shell company Lidex Holdings sent US $9,980.50 in March 2008, US $19,980.50 in June of the that year, and US $24,980 in March 2010 to the accounts of these proxies.

Batbold also shows up in "Paradise Papers"

Batbold’s name also shows up in the Paradise Papers, a joint investigation by the International Consortium of Investigative Journalists (ICIJ), KCIJ-Newstapa and other news outlets across the world from 2017. Records showed that Batbold was listed as a shareholder in a British Virgin Islands based company called Batu Mining from Nov.21, 2003, to Dec.1, 2005. Batbold later sold his stake in Batu to a Hong Kong-based company Ever Legend Engineering, which was fronted by another Korean proxy.
Other Paradise Papers documents also list Cheong, along with Batbold’s eldest son Battushig Batbold, as a director of another British Virgin Island based company called Future Monson Holdings Limited.

Mongolian government’s lawsuit against ex-PM and Korean proxies

The complex network of Batbold and Cheong’s alleged shell companies, carefully designed over many years first came to light after the Mongolian General Prosecutors' Office and Mongolia’s Independent Authority Against Corruption commissioned a wider investigation into corruption of high-ranking Mongolian officials to a famous U.S.-based private investigation firm, with consent from its cabinet, parliament and the National Security Council in 2018.
K2 Intelligence has made a name for its investigations into financial crimes and other corruption cases across the world since the 1970s, including on former Philippines President Ferdinand Marcos and former Iraqi President Saddam Hussein.
And in November last year,  the Mongolian Government Agency for Policy Coordination on State Property and state-run mining companies Erdenet and Oyu Tolgoi filed a civil suit against Batbold and his alleged proxies in Mongolia and the U.S. based on the findings of the firm’s investigation.
▲ The Mongolian Government Agency for Policy Coordination on State Property and state-run mining companies Erdenet and Oyu Tolgoi filed a civil suit against Batbold and his proxies in Mongolia and the United States in November 2020. Source: New York County Supreme Court
Courts in the U.K., Hong Kong, Singapore and Jersey have approved measures to freeze assets against Batbold and his proxies.
“The reason we were told was because this was what would be the most effective way to bring money back to the country,” said Jules Kroll, co-founder and chairman of K2 Intelligence. “This effort is all about identifying money that belongs to the Mongolian people and brings it back.”

Cheong "I was just a business partner with Batbold"

During a phone interview with KCIJ-Newstapa, Cheong Choo-young confirmed that he was listed as directors or shareholders of 28 alleged offshore shell companies.
Cheong said that he first met Batbold in 1997, when he was a Samsung C&T employee and Batbold was a businessman. Cheong said after leaving Samsung in 2007, his business relationship with the to-be-Mongolian prime minister formed as Cheong began venturing into his private business in Mongolia.
As for other Korean proxies, who also became defendants in the civil lawsuits, Cheong said they have done nothing wrong but their names were included in the suit because they were close friends to him or related business-wise.
Cheong also denied the illegality in his actions of moving Batbold’s money or hiding it on behalf of Batbold. 
"In the case of a criminal lawsuit, someone must have clear allegations to be named as a defendant, but in a civil case, you can be included in any circumstances (even if the charges are not clear)," Cheong said in the interview.
Cheong avoided answering further questions, saying he did not want to adversely affect Batbold's trial in Mongolia, but replied that he was willing to answer if Batbold asked. KCIJ-Newstapa emailed Cheong a list of detailed questions about the 28 offshore companies to which he was listed, but Batbold’s attorney in South Korea replied and said it will answer the questions. KCIJ-Newstapa plans to reflect Batbold’s answer once the answer arrives. 

Ex-PM denies what has been said in the lawsuit

Since last year, Batbold's side has claimed through Mongolian media that what’s been submitted to the lawsuit is false and that the lawsuit was filed as a political negative campaign to slander his party ahead of the upcoming presidential election in Mongolia.
However, the investigation firm refuted the claim in the interview with KCIJ-Newstapa.
“Our work was supported by the then-prime minister, by the Speaker, by the President and all the members of the National Security Council, and then approved our contract in 2018 to do this work,” said Kroll. “And it was long before the Presidential election. We had looked at many people, but this (case) was by far the most prominent in the amount of money.”
Cheong Choo-young seems to be still working as Batbold’s proxy or at least to be still closely connected in business. According to court documents, Cheong and Batbold’s family members indirectly owned International Cashmere Trade Limited until 2019. This company is a major partner of Altai Cashmere LLC, one of the major affiliates of Altai Holding LLC, where Batbold's eldest son inherited the chairmanship.
As trials are underway in Mongolia and the U.S., the Korean National Tax Service also needs to investigate whether Korean proxies, including Cheong, properly reported their overseas financial accounts in their names and whether there are any suspicious transactions. 
Under the National Tax Service regulations as of 2020, Koreans or overseas Korean citizens who stay in Korea for more than 183 days a year must report their overseas financial accounts worth more than 500 million won.
Asked by KCIJ-Newstapa about Cheong and other former employees’ operation linked to the former Mongolian prime minister and whether that relationship was formed during their time at the company, Samsung C&T’s spokesperson denied any knowledge of it.
"We do not know whether Cheong and others participated in or assisted in acts related to former Prime Minister Batbold, and it has nothing to do with our business,” Samsung C&T’s spokesperson said.
KCIJ-Newstapa sent a list of detailed questions to Cheong Choo-young about 28 companies, to which he was named as executives. 
A Seoul-based law firm, which former Prime Minister Batbold appointed as a legal representative, reached out to Newstapa reporters that it will answer the questions. 
Newstapa did not hear back from it until the story was published on June 4.
On June 17, Batbold’s legal representative Kim Chang Lee sent a statement as follows.
“Former Prime Minister Batbold is not the real owner of the companies, and Cheong Choo-young is not his proxy. 
Batbold does not own the U.K.-based properties or any other assets mentioned in the Newstapa’s article. 
This is just one of the groundless lawsuits, which was raised against Batbold without prior notice as part of an aggressive and organizational political campaign. 
All statements in this lawsuit were designed with political intentions with an aim to disparage Batbold’s reputation in and outside Mongolia as an ethical and progressive politician”
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