A member of SK Group’s Chey family is once again under the scrutiny of the investigative authorities, adding to the growing list of suspect goings on at the country’s third largest conglomerate.

In the latest investigation involving a member of the Chey family, prosecutors have banned vice chairman Chey Jae-won from leaving the country as they look into the allegation that he has slush funds amounting to tens of billions of won.

Jae-won is SK Group chairman Chey Tae-won’s younger brother, and the second of his extended family to come under investigation in as many years.

Last year, his cousin Chey Chul-won, former president of SK Group-affiliated logistics firm M&M, was arrested for assaulting a trucker and trying to pay him off with 20 million won ($18,800) and was given three years probation in April.

Vice chairman Jae-won is suspected of having formed illegal funds by receiving undocumented payments from subcontractors working on an SK Group subsidiary’s project.

The prosecution is also looking into a suspicion that the 12 billion won belonging to Jae-won found in a safe owned by Benex Investment’s Kim Joon-hong is part of the vice chairman’s slush funds.

Kim, a former SK Telecom executive, was taken into custody in May for his involvement in manipulating share prices of the resource developer Gloworks.

While investigating the Gloworks share price manipulation case, the prosecution found 17.5 billion won in a safe, of which 12 billion won was found to belong to Jae-won. Kim reportedly said that he was simply holding the money for the vice chairman.

The group is denying allegations that the younger Chey was involved in any illegal activities.

“As far as we know, the money found (in the safe) was part of the vice chairman’s private funds,” an SK Group public relations official said.

“The company has seen no indication that he has been involved in illegal activities, as there are no laws against making investments using personal funds.”

While Jae-won’s case is still ongoing, this is not the first time a member of the group’s founding family has been involved in such a case.

In 2003, Chey Tae-won was involved in a massive accounting fraud scandal involving 1.5 trillion won, and was given five years in probation in 2008.

The SK Group chairman also attracted attention earlier this year when it was found that he had lost some 100 billion won on a futures investment. Although a tax investigation did not reveal any irregularities about the developments, ambiguity about the source of the funds and the reason behind Tae-won investing in comparatively high risk futures raised speculations.

In addition, with Jae-won’s case following hard on the heels of suspicions that SK Group bribed former tax officials, the group is unlikely to be able to come out with its image unscathed.

Last month, the public prosecutors began looking into a possible bribery case involving SK Group and former National Tax Services’ Investigation Bureau chief Lee Hee-wan.

Lee was found to have received 50 million won a month from an SK subsidiary since leaving the NTS in June 2006.

While the payments were claimed to have been advisory fees, the prosecutors conducted an investigation into the matter based on the large amount involved and Lee and SK Group’s history.

While serving as the NTS’ investigations chief, Lee conducted a tax investigation on SK affiliates, fueling suspicion that the “advisory fees” were paid in return for having given SK companies favorable assessment in past investigations.

In addition to Lee, it was also found by the Seoul District Prosecutors’ Office that former NTS deputy chief Hur Byung-ik also received 200 million won from SK Group since leaving the public post in July 2009.

By Choi He-suk (cheesuk@heraldcorp.com)