Justice Minister Choo Mi-ae on Friday ordered immediate inspections of prosecutors whom a jailed businessman allegedly lobbied in connection with a hedge fund scandal.

Kim Bong-hyun, a key suspect in a financial fraud case involving Lime Asset Management Co., claimed earlier in the day that he lobbied prosecutors and politicians in both the ruling and opposition camps before the investigation was launched early this year.

In a statement issued from prison, Kim claimed that he had his lawyer treat three incumbent prosecutors with a drinking party worth 10 million won ($8,726) last year. One of them took part in the investigation into the Lime scandal, he said.

The justice ministry said Choo was "shocked" by the allegation. 

"The minister ordered officials to thoroughly uncover the truth as it is a grave issue that draws keen public attention," the ministry said.

Kim, the owner of Star Mobility, believed to be the main financial source for Lime, was arrested in April on charges of embezzlement.

Lime Asset is under probe over its alleged cover-up of massive losses and subsequent suspension of fund redemption worth an estimated 1.6 trillion won.

The company is accused of having concealed investment losses and inflating investment returns in a bid to keep its customer base. (Yonhap)