Prosecutors search LG in tax probe
By Kang Seung-woo
The prosecution searched the headquarters of LG Group, Wednesday, over allegations of tax evasion by family members controlling the nation's fourth-largest conglomerate.
Prosecutors are investigating whether the family of LG Chairman Koo Bon-moo dodged 10 billion won ($9.25 million) of capital gains tax after the family unloaded and increased their equity holdings in LG affiliates.
The raid came after the National Tax Service filed a complaint against the family of LG Chairman Koo Bon-moo in April and investigators from the Seoul Central District Prosecutors' Office confiscated evidence including accounting documents and computer hard drives.
“We never expected the search and it is not proper to comment on the ongoing investigation,” a senior official of the business group said.
Later, the conglomerate issued a statement saying it would fully cooperate with the prosecution.
After dissecting the confiscated evidence, the prosecution plans to summon LG officials or some family members.
However, the LG chairman and his brother, Heesung Electronics Chairman Koo Bon-neung, are not targeted for investigation. Investigators did not raid houses of the owner's family members.
The raid comes as a big surprise due to the business group's solid reputation after avoiding a lot of corruption scandals that are common in the Korean business sector.
LG was one of the few “chaebol” that were not involved in the corruption scandal involving former President Park Geun-hye and her close confidant Choi Soon-sil, in which they twisted the arms of the nation's conglomerates to fund two private foundations run by Choi. The scandal eventually led to Park's impeachment last year.
Recently, several leading conglomerates Samsung, Hyundai Motor and Lotte have been facing prosecutors' investigations, while Hanjin Group, the largest share holder of Korean Air, is also under fire for its owner family's alleged abuse of employees.
“As even LG is facing the prosecution's investigation, the business sector is in huge shock,” an official of the business industry said.