CJ Group chairman quizzed

CJ Group Chairman Lee Jay-hyun, center, enters the Seoul Central District Prosecutors’ Office in southern Seoul, Tuesday, to be questioned over alleged tax evasion and embezzlement. / Korea Times photo by Shim Hyun-chul

By Kim Jae-won

The prosecution questioned CJ Group Chairman Lee Jay-hyun, Tuesday, over allegations he accumulated a combined 116 billion won from tax evasion, embezzlement and stock price manipulation.

Sources say that prosecutors will seek an arrest warrant for Lee later this week and indict him on specific charges.

“I’m sorry for causing concern. I will sincerely answer all questions,” Lee told reporters before entering the Seoul Central Prosecutors’ Office (SCPO) in southern Seoul.

Lee, accompanied by lawyers and executives, was brought in as suspect, the prosecution said.

Investigators quizzed the 53-year-old tycoon over evading paying 51 billion won ($44.5 million) in income tax by hiding assets at home and abroad. He is also suspected of hiding tens of billions won in bank accounts under “borrowed names.”

The grandson of the late Samsung Group founder Lee Byung-chull was questioned over whether he embezzled 60 billion won of corporate funds from CJ CheilJedang, a flagship food affiliate, by inflating prices of raw materials.

The prosecutors also believe that he gained 5 billion won illegally by manipulating the stock price of CJ Corp., the holding company of the group, and CJ Cheiljedang between November 2008 and July 2010.

Investigators have gathered data from the Korea Exchange and the Financial Supervisory Service to track down irregularities regarding CJ shares.

“Tax evasion and embezzlement are deeply rooted in Korean conglomerates. The prosecution and the judiciary should not show any mercy to Lee in order to uproot such economic crimes,” said Kim Hwan-ki, a director at the Citizens’ Coalition for Economic Justice.

Prosecutors say that Lee embezzled 35 billion won in corporate funds in buying two buildings in Tokyo and purchased some 300 fine art works from Seomi Gallery under names “borrowed” from the group’s executives.

Lee’s summons came after a month-long investigation that started with a raid on the group’s headquarters on May 21.

The vice president of CJ Global Holdings identified only by his surname Shin, has already been questioned for allegedly playing a key role in managing money for Lee.

Shin, who was arrested earlier this month, is expected to be indicted today for his involvement in embezzlement, tax fraud and breach of trust.