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Saturday, Feb. 9, 2008

Ex-banker pleads not guilty to defrauding Chongryon


Staff writer

An ex-bank official associated with former public security agency chief Shigetake Ogata pleaded not guilty Friday to fraud, denying that he took part in an investment scam to swindle the pro-Pyongyang group Chongryon out of the ownership of its Tokyo headquarters building.

Koji Kawae, 43, told the Tokyo District Court that he did not conspire with Ogata and "never thought of defrauding" the Korean group.

"I apologize sincerely to Chongryon for causing the confusion and much trouble," Kawae said during his trial's first session, but claimed he did not work together with Ogata and was unaware of the alleged criminal plot.

The case has been in the media spotlight because the former head of the Public Security Intelligence Agency, which is in charge of undertaking surveillance on subversive organizations, including Chongryon, was involved in the alleged sham business deals with the entity under the agency's observation.

According to prosecutors, Kawae, Ogata and Tadao Mitsui, a former realtor, conspired last April to take over Chongryon's headquarters in Tokyo's Chiyoda Ward by registering as its owner, despite having no financial resources.

Ogata and Mitsui approached Kawae last April and asked him to find investors, to which Kawae agreed. When that failed, the three arranged to mislead Chongryon by telling it that "the money will be 100 percent ready," and transferred the ownership of the headquarters in June without making any payments, the prosecutors said.

Prosecutors alleged that the trio promised to offer ¥3.5 billion to the group, but intended to make a profit by reselling the property without making the payment.

Kawae, arrested later that month, acknowledged Friday that he misinformed Chongryon, but insisted that he did not intend to con the group. "I continued to seek investors" even after the transfer of the ownership, he told the court.

Chongryon was in need of investors to purchase its headquarters at the time, since its properties were to be seized due to its ¥62.7 billion debt to the state-backed Resolution and Collection Corp.

Making use of his fame as a former chief of the security agency, Ogata had cooperated with Mitsui in launching his realtor business. In dealing with Chongryon, he suggested that Harvest, his investment advisory firm, would offer ¥3.5 billion to take over ownership of the building but enable Chongryon to use its headquarters.

Harvest completed its registration as the headquarters' owner on June 8 but returned its rights to Chongryon 10 days later. RCC and Chongryon are on trial at the Tokyo District Court to determine the process and rights to auctioning off the building.

Prior to his arrest, Ogata told reporters that the attempted purchase was an effort to help Chongryon's operations and the rights of ethnic Koreans, and that he had expected Kawae to secure investors for the deal.

Ogata, a prosecutor-turned-lawyer, and Mitsui are also charged with defrauding Chongryon out of ¥484 million during the negotiation process to transfer ownership.



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