By Kim Rahn
Hyosung Group Chairman Cho Suck-rae has been banned from overseas travel while he is being investigated for alleged tax evasion.
Cho is related to former President Lee Myung-bak through the marriage of his nephew to Lee's daughter, and when former President Lee was in power he led the big business lobby group, the Federation of Korean Industries.
A tax probe at the time into Cho's family business tapered off during Lee's presidency.
The National Tax Service (NTS) launched a special tax inspection of the group at the end of May.
Tax officials claimed Cho collected assets under borrowed names and the company evaded a huge amount of taxes through account rigging.
In August, the tax agency turned the tax audit into a tax crime investigation, and asked the Ministry of Justice to impose an overseas travel ban on Cho, the vice chairman and a managing director of the firm.
Unlike regular tax audits, a tax crime investigation is made when the NTS secures clear evidence of tax evasion through account book fraud or document forgery and a criminal charge is expected to be filed against the perpetrator.
The authority usually files a complaint with the prosecution when a company evades more than 500 million won in taxes.
The NTS has focused on the company's possible offshore tax evasion, such as omitting profits obtained through the group's overseas corporations in Hong Kong and Singapore.
Cho is suspected of having amassed large assets under borrowed names, and one of the executives is suspected of having managed the assets.
"We plan to finish the investigation into the group within this month and open a review committee on tax irregularities to decide on how much additional tax to charge and whether to file a complaint against the company and the executives," an NTS official said.
Regarding the overseas travel ban, an official of Hyosung said, "We and the NTS have different interpretations on the suspicions of borrowed names and accounting fraud cooking. We are explaining our interpretation to the authorities."
Hyosung is the nation's 26th largest group in terms of the size of its assets at more than 11 trillion won. Hankook Tire President Cho Hyun-bum, the son of Hankook Tire Chairman Cho Yang-rae who is the Hyosung chairman's younger brother, is former President Lee's son-in-law.
Since the Lee administration, Hyosung and other companies run by the Cho family have undergone an investigation by the prosecution and also NTS inspections regarding possible slush funds and overseas real estate speculation.
Besides Hyosung, the tax and law enforcement authorities have eyed conglomerates whose chiefs were close to the ex-President, and who were rumored to have got business favors under the Lee administration.
CJ Group Chairman Lee Jay-hyun, who graduated from Korea University, which Lee Myung-bak also attended, and who was close to other alumni of the school, was arrested in July on charges of tax evasion and embezzlement.
POSCO is now also undergoing a tax audit. Its Chairman Chung Joon-yang was appointed under the Lee administration. The NTS also launched an audit of Lotte Shopping in July. Lotte largely expanded its businesses during the five years of Lee's term, with its assets doubling.
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| Cho Suck-rae |
Cho is related to former President Lee Myung-bak through the marriage of his nephew to Lee's daughter, and when former President Lee was in power he led the big business lobby group, the Federation of Korean Industries.
A tax probe at the time into Cho's family business tapered off during Lee's presidency.
The National Tax Service (NTS) launched a special tax inspection of the group at the end of May.
Tax officials claimed Cho collected assets under borrowed names and the company evaded a huge amount of taxes through account rigging.
In August, the tax agency turned the tax audit into a tax crime investigation, and asked the Ministry of Justice to impose an overseas travel ban on Cho, the vice chairman and a managing director of the firm.
Unlike regular tax audits, a tax crime investigation is made when the NTS secures clear evidence of tax evasion through account book fraud or document forgery and a criminal charge is expected to be filed against the perpetrator.
The authority usually files a complaint with the prosecution when a company evades more than 500 million won in taxes.
The NTS has focused on the company's possible offshore tax evasion, such as omitting profits obtained through the group's overseas corporations in Hong Kong and Singapore.
Cho is suspected of having amassed large assets under borrowed names, and one of the executives is suspected of having managed the assets.
"We plan to finish the investigation into the group within this month and open a review committee on tax irregularities to decide on how much additional tax to charge and whether to file a complaint against the company and the executives," an NTS official said.
Regarding the overseas travel ban, an official of Hyosung said, "We and the NTS have different interpretations on the suspicions of borrowed names and accounting fraud cooking. We are explaining our interpretation to the authorities."
Hyosung is the nation's 26th largest group in terms of the size of its assets at more than 11 trillion won. Hankook Tire President Cho Hyun-bum, the son of Hankook Tire Chairman Cho Yang-rae who is the Hyosung chairman's younger brother, is former President Lee's son-in-law.
Since the Lee administration, Hyosung and other companies run by the Cho family have undergone an investigation by the prosecution and also NTS inspections regarding possible slush funds and overseas real estate speculation.
Besides Hyosung, the tax and law enforcement authorities have eyed conglomerates whose chiefs were close to the ex-President, and who were rumored to have got business favors under the Lee administration.
CJ Group Chairman Lee Jay-hyun, who graduated from Korea University, which Lee Myung-bak also attended, and who was close to other alumni of the school, was arrested in July on charges of tax evasion and embezzlement.
POSCO is now also undergoing a tax audit. Its Chairman Chung Joon-yang was appointed under the Lee administration. The NTS also launched an audit of Lotte Shopping in July. Lotte largely expanded its businesses during the five years of Lee's term, with its assets doubling.
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