Bang Si-hyuk Referred as Prosecutorial Reform Raises Probe Concerns

The 20-month police investigation into Bang Si-hyuk, chairman of K-POP giant HYBE, is entering its final stage. But a major overhaul of Korea's prosecution system, set to take effect on October 2, is about to make the case far more complicated. Legal observers say the timing could turn the investigation into a fresh power struggle between police and prosecutors.

On August 31, Hong Seok-gi, chief of the National Office of Investigation, told reporters that Bang's case is "nearing referral to prosecutors." He said the referral would happen within the week and that a custody decision would come at the same time. Bang is expected to be referred without being taken into custody.

Police have already tried twice to arrest him and failed both times. On April 21, they requested an arrest warrant. Three days later, the Seoul Southern District Prosecutors' Office sent the request back, saying police had not shown enough grounds for custody, and asked for further investigation. Police filed a second request on April 30. On May 6, prosecutors again refused, saying the additional ivestigation had not been done properly. The friction between the two sides was already visible.

Once police refer the case this week without detention, prosecutors will review the file and decide whether to indict. Under current law, they can still call Bang in for direct questioning or order additional investigation if needed.

The problem is time. On October 2, the current Prosecutors' Office will be abolished and replaced by a new two-part system: a Public Prosecution Office, which handles indictments, and a Serious Crimes Investigation Agency, which handles direct investigations. Large financial cases usually take months of prosecutor review and follow-up work after referral. Wrapping up a fresh review of the key issues, plus any additional investigation, in less than a month is a tall order. Because police took so long to refer the case, prosecutors have effectively lost the window to conduct their own fact-finding investigation.

If Bang's case is not resolved in September, it will automatically transfer to the new Public Prosecution Office automatically. Roh Jong-eon, managing attorney at law firm Jonjae, said cases handed over by police will simply carry over. "What changes is what the prosecutor on the case is allowed to do," he said. "Starting October 2, even for cases sent over by police, prosecutors will not be able to call the person in and question them directly. If something is missing, they will have to ask police to investigate and wait for the result."

The new law does leave one exception. Prosecutors can keep working on a case under the old system for up to 90 days if the statute of limitations is close to running out, or if the nature of the case makes it unavoidable. But the detailed rules for deciding which cases qualify have not been written yet.

"The law created an exception, but the specific rules for what counts as an exception have not been made," Roh said. "This is not just an issue for one case. It applies to every case sitting with prosecutors right now."

It is also unclear who would handle any additional investigation. Bang is being investigated on suspicion of fraudulent unfair trading under the Capital Markets Act, an economic crime that falls within the Serious Crimes Investigation Agency's jurisdiction. Whether the Public Prosecution Office can ask that agency, rather than police, to conduct follow-up investigative work is not yet spelled out in the lower-level regulations. "The tug-of-war between prosecutors and police that started with the arrest warrant could keep going through the rest of the process," one legal source said. "Bang's case is turning into a test of who investigates what."

Bang is accused of fraudulent unfair trading under the Capital Markets Act. Police have been investigating whether, ahead of HYBE's 2019 stock listing, Bang allegedly told existing investors there was no plan for an initial public offering, then had them sell their shares to a specific special purpose vehicle.