By Kim Jae-won
Staff Reporter
The nation's tax agency said Tuesday that it had launched an audit on Hyosung Group as part of a routine inspection that occurs every five years. A source at the agency said it was a regular audit; the last one on Hyosung was in 2005.
The audit has gained attention as the group has been under investigation by the prosecution since last year over allegations it created a slush fund through its subsidiaries in the United States. The children of the owner were alleged to have used the money to purchase real estate overseas.
In particular, the group has "special" ties with President Lee Myung-bak. Group Chairman Cho Suck-rai's nephew Cho Hyun-bum, an executive vice president of Hankook Tire, married Lee's third daughter in September 2001.
The National Tax Service (NTS) said that it began carrying out the audit on Hyosung on April 12 and it will last for 48 business days.
During the audit, it plans to look into overseas properties owned by Cho and his family to see whether there were any unlawful transactions.
"The audit is underway. Our inspectors will check offshore real estate of the owner's family valued at millions of dollars," a senior official at the agency said on condition of anonymity. "They will check all of the group's financial statements after 2005, too."
NTS Commissioner Baek Yong-ho set the standard for regular audits for companies, whose annual total sales exceed 500 billion won in September 2009. He also shortened the interval between them to four years.
Activists are doubtful about whether the NTS will unveil Hyosung's suspected overseas tax evasion.
"I am not sure whether the NTS will inspect Hyosung thoroughly. The agency has done numerous audits on conglomerates, but was too generous with them. We will wait for the results, and then decide on how to deal with the issue," a senior representative of the Citizens' Coalition for Economic Justice said. He also said that Hyosung's relationship with President Lee will be burden the agency.
Hyosung operates in various fields, such as the chemical industry, industrial machinery, IT, trade, and construction sectors, and was established in 1957. It is known mostly for high-end apartments and automatic teller machines.
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