NHN Beijing office right before selling its joint game business with Sea Rainbow Holdings/ Source from Tai Ping Yang game website

The suspicion surrounding $50 million (50 billion won) investment in China by NHN, the operator of Korea's omnipotent 'dinosaur portal' Naver, is becoming amplified due to its ambiguous usage. Some even claim that the amount of investment surpasses 100 billion won. Particularly, it meshes with some reports of NHN making a loss of 100 billion won due to its investment in China, pressing NHN for an answer.

According to Beijing's several Korean IT industry insiders and former NHN employees on July 21, the fund raising suspicion is closely related to the liquidation of Ourgame, which was Chinese investment business of NHN's game division Hangame.

Hangame reached an agreement with Chinese large game company Lianzhong on joint business negotiations in 2004.

After the agreement, NHN established a paper company called NHN Global in Cayman Islands in order to acquire 50% stake of Lianzhong.

In June 2004, NHN Global invested $100 million (approx. 110 billion won), and created a joint venture with Lianzhong's parent company, Sea Rainbow Holdings. As a result, NHN spent $100 million in acquisition of 50% stake of Lianzhong.

A former executive at NHN said, "Hangame's investment business, which was provided under the name of Ourgame in the end of 2004, didn't perform better than expected."

Some former executives now retired at Sea Rainbow Holdings, testified, "There were some conflicts between two companies."

NHN didn't go into liquidation until the end of 2009. Then in 2010, the company has decided to sell all the stake in 2010 to employees of Sea Rainbow Holdings.

The payment was said to be $50 million, a half of original investment. However, the payment has been deposited into NHN China account of WooriBank Beijing and it hasn't come to Korea for 4 years.

This is why the suspicion has become widespread among Chinese and Korean IT industry insiders that NHN has created a slush fund.

On the other hand, some claim that the funds reach more than 100 billion won.

An anonymous industry insider said, "Ourgame didn't offer absolutely overwhelming games in China yet, it didn't go into the red. Then it's hard to take at face value that NHN sold it for $50 million, which is half amount of its investment. Although the company sold the stake for next to nothing, I think the company recovered the cost."

The insider said, "NHN didn't have a keen interest in Chinese business but it carried on business. It can be seen that it gave a thought of using the liquidation funds as a slush fund later."

Currently, it's hard for prosecutors and the National Tax service officials assigned from Embassy of the Republic of Korea or the government to conduct a thorough investigation on NHN's slush fund suspicion in China. The national authorities should actively come to clarify the truth.