South Korean prosecutor arrested over '05 purchase of Nexon stock

Controversial South Korean prosecutor Jin Kyung-joon has been arrested on bribery charges relating to a shady stock arrangement with Nexon founder Kim Jung-ju. Nexon develops and publishes free-to-play online games such as Maple Story and DomiNations.

The arrest follows a raid on Kim’s house on July 12th and months of inquiry into Jin’s government-mandated disclosure of earning millions of dollars after selling Nexon stock last year. The arrest embroils Nexon, which is Korea's largest game publisher, in an escalating series of scandals among Korean public officials. 

According to the Korea Times, Jin allegedly bought privately held Nexon shares at 40,000 won per share in 2005. This was far lower than the market price set between 100,000 and 150,000 won at the time. 

Jin made this purchase shortly after departing the South Korea Financial Intelligence Unit in 2004, allegedly with money loaned to him by Nexon, which has raised questions about if he favored Nexon during his time with the agency. The close timing of this purchase has led some to describe Nexon's loan as a bribe.  

He allegedly sold the private shares back to Nexon in 2006 for 12 Billon won ($881,000), then used those profits to buy shares of Nexon Japan in 2006. In March Jin revealed he’d earned 12.6 billion won ($11 million) after selling those shares, which raised concerns over how he acquired so much stock in the first place. 

By all indications, Jin acquired the original privately-held stock through his longstanding friendship with Kim Jung-ju. The Korea Times reports they’ve been close friends since they attended college together in the 1980s. 

In June, Nexon admitted it had lent lent Jin and two other buyers money to buy their stock in 2005, stating they had provided them with the funds because they claimed they would be able to quickly pay back the money. Jin had previously told the Government Public Ethics Committee that he had bought the shares with his own money, then that he had borrowed it from his mother-in-law. 

Nexon also stated the reason it had sold the privately held stock to Jin was to prevent its sale to an investment firm after an executive’s departure, but did not say how it loaned the money to Jin and the other buyers or who ordered the loans. 

Jin is also facing unrelated corruption charges for allegedly failing to file charges against the Hanjin Group in exchange for business deals with his brother-in-law's cleaning company. 

Disclosure: The writer of this article previously worked as a temporary employee for Nexon America in 2014.