By Lee Hyo-sik
The prosecution is expanding its probe into Taekwang Group to secure evidence that it created tens of billions of won in a slush fund by raiding the nation’s top tax office.
The Seoul Western District Prosecutors’ Office sent a group of investigators Monday afternoon to the Seoul Regional Tax Office to confiscate computer hard disks and other tax-related documents concerning Korea’s 40th largest conglomerate.
Prosecutors are looking into allegations that the tax office was lobbied by the scandal-ridden business group in early 2008 when it imposed nearly 100 billion won in inheritance taxes on Taekwang after discovering large sums of unclaimed funds at its subsidiaries.
At the time, tax officials launched a tax audit into Taekwang Industrial, Goryo Savings Bank and group Chairman Lee Ho-jin on suspicions of having a slush fund.
They levied taxes on Taekwang but did not refer the case to the prosecution for criminal investigation, saying the group and Lee did not evade paying taxes on purpose.
But the incident has raised suspicion that the district tax office was lobbied by Taekwang in order to reduce punishment.
Prosecutors also plan to secure tax documents related to Taekwang in 1997 when the chairman, Lee, took over the group from his father, to check allegations that he did not report part of his inherited wealth to the tax office and if so, how he has managed such funds.
“It is too early to say anything for sure at the moment. We are currently analyzing confiscated material,” a prosecution official said.
Their investigation is also focused on getting on evidence to prove that the group bribed financial regulators to seek favors in the process of its acquisition of Heungkuk Life Insurance in 2006.
Separately, the labor union of a group subsidiary claimed Tuesday that group Chairman Lee created an 80 billion won slush fund through insurance accounts opened under “borrowed” names at the insurer.
Investigators have already secured evidence that Taekwang hoarded tens of billions of won in a slush fund through bank accounts opened in borrowed names at Goryo Savings Bank.
The group also opened security accounts under borrowed names to purchase shares of its subsidiaries, while buying real estate, also under borrowed names.
After securing testimonies that Taekwang lobbied officials of Cheong Wa Dae and the Korea Communications Commission to win business favors, investigators have been trying to find out how the group spent the slush fund and who it lobbied.
Taekwang has expanded its reach to cable TV and financial services industries over the past few years. They are also investigating possible illicit wealth transfer, embezzlement and breach of trust involving Chairman Lee and his son.
The chairman is suspected of transferring shares of group subsidiaries at lower than market prices to the unlisted company owned by his son.These allegations emerged after computer disks and confidential documents, confiscated during a raid on Lee’s home and office over the weekend, were examined.