The offices of the Korean esports Association (KeSPA) have been raided by South Korean police, and two aides to its former chairman arrested, in an investigation into bribery and embezzlement of association funds.
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According to Korean newspaper Hankyoreh, the local prosecutor’s office became suspicious when KeSPA received hundreds of thousands of dollars’ worth of payments from Lotte Homeshopping, a TV and Internet shopping network with a history of bribery and falsifying documents to renew its licence. A prosecutors’ investigation into Lotte last year led to the indictment of its CEO.
Another local paper, Joongang Ilbo, reports that one of the chairman’s aides requested Lotte Homeshopping form an esports team shortly after their licence was renewed. They cite a source close to Lotte, who said the network considered the price - a billion won (roughly $894,000 US) - too expensive, but offered instead to sponsor a KeSPA tournament for around 300 million won (roughly $270,000 US).
The prosecutors believe 100 million won of this sponsorship money was embezzled by two of the chairman’s aides, with the help of a money launderer. These are the three parties that have been arrested, with the aides taken into custody in that raid two days ago. For their part, Lotte denies that any illicit favours were received in return for their sponsorship.
KeSPA's former chairman himself has yet to be directly implicated in the current scandal. He hasn’t even been officially named, but local media describe him as a former MP and a current member of the Korean president’s staff, which would indicate that he is Jeon Byung-Hun.
Jeon formerly sat on a government committee with the power to renew Lotte Homeshopping’s operating licence, so if part of Lotte’s sponsorship fee found its way to him during his time on that committee, that could constitute a bribe. He has promoted esports in Korea and as such is generally liked by fans; Yonhap news also notes that he pushed through legislation enabling the government to close home shopping companies for certain unfair business practices. If he turns out to be involved in this it would be an especially huge scandal, given his reputation.
The news comes to us via Team Liquid, who have done a great job collating and translating several Korean news sources. KeSPA was formed by the South Korean government back in 2000 and oversees the country's world-leading esports industry.