CJ probe expands
By Kim Jae-won
Prosecutors are investigating the three siblings who control CJ Group to uncover the whereabouts of an estimated 500 billion won ($450 million) in hidden assets, sources said Wednesday.
The three are CJ Group Chairman Lee Jay-hyun, his elder sister and CJ E&M Vice Chairwoman Lee Mi-kyung and JS Communications CEO Lee Jae-hwan, his younger brother. They are suspected of hiding the assets under “borrowed name” bank accounts at home and abroad.
The Seoul Central District Prosecutors’ Office has reportedly banned Chairman Lee’s two aides from leaving the country.
CJ E&M is a key entertainment affiliate of the group, while JS Communications is an advertising agency subsidiary of CJ.
Investigators are concentrating on tracking the food and entertainment giant’s alleged slush fund placed in accounts at Swiss bank branches in Hong Kong, estimated at a minimum 20 billion won, according to the sources.
Prosecutors were said to have built a strong case against them, finding banking accounts under the names of the conglomerate’s former and current executives.
Tax officials say they may face criminal charges.
“All Korean residents must report overseas account if the combined balance tops 1 billion won. They face up to two years imprisonment for failing to do so,” said a high-ranking official of the National Tax Service on condition of anonymity.
The tax official said CJ may have hidden the funds in Hong Kong to avoid taxes. He added the three Lees could face additional charges if the funds were created through embezzlement.
According to data from the Financial Supervisory Service, the group runs seven subsidiaries in Hong Kong.
They include CJ China, CJ Global Holdings, CGI Holdings, CMI Holdings and UVD Enterprises, which all have the same address in the same building. This led investigators to conclude they were “paper companies” for fake transactions between them and the headquarters in Seoul.
CJ Group denied the allegations.
“All of the five companies play their own role from trading to supervising Chinese businesses. They are in the same building because they do not need many employees,” said Lee Young-pyo, a spokesman for the group.