CJ chairman faces up to10 years
A citizen walks past the main office of CJ Group in Namdaemun, downtown Seoul, Tuesday. The food and entertain conglomerate is being investigated by the prosecution, which suspects the company and its chairman, Lee Jay-hyun, committed tax evasion and stock price manipulation. / Korea Times photo by Hong In-ki
By Kim Jae-won
CJ Group Chairman Lee Jay-hyun faces up to 10 years in prison if he is convicted of tax evasion, illegal capital outflow, stock manipulation and breach of trust, prosecutors said.
The prosecution plans to summon the 53-year-old food and entertainment industry mogul as early as this week for questioning.
He allegedly dodged tens of billions of won of income tax, hid 400 billion won ($355 million) abroad, manipulated stock prices of the group’s affiliates and damaged the company’s interest by helping his siblings.
Observers say Cido Shipping Chairman Kwon Hyuk is a good indicator to predict the future of the CJ chairman. The Seoul Central District Court sentenced Kwon in February to four years in prison and 234 billion won in fines for failing to pay 220 billion won of income tax.
In terms of illegal capital outflow, the case of Choi Soon-young, ex-chairman of the now-defunct Shindonga Group, hints that Lee may face even harsher punishment. The Supreme Court sentenced Choi to five years in prison and fines of 157.4 billion won in July 2006 for hiding $160 million in the United States.
The judiciary also applies heavy punishment on stock manipulation. According to the Capital Market and Financial Investment Law, stock manipulators can face up to 10 years in prison or 500 million won in fines.
Prosecutors are focusing their investigation on assets hidden by Lee under borrowed-name accounts dating back to 2008.
In 2008, police revealed Lee had secretly managed funds under borrowed-named bank accounts and ordered him to pay 170 billion won ($151 million) in back taxes.
However, the National Tax Service did not file a criminal complaint against him at the time.
CJ Group said Lee inherited the funds from his grandfather and the founder of Samsung Group, Lee Byung-chull, and the group paid the 170 billion won in taxes. Lee is the eldest son of Lee Maeng-hee, who is the elder brother of Lee Kun-hee, the chairman of Samsung Electronics.
The prosecution believes the country's 14th-largest conglomerate amassed slush funds in borrowed-name accounts.
According to the related laws, those who take more than 30 billion won in illegal gains from stock manipulation are subject to up to 11 years in jail. Charges of breach of trust and tax evasion vary from four to 11 years in prison according to the amount of money.