CJ chairman detained

By Kim Jae-won

Lee Jay-hyun CJ Group Chairman

CJ Group Chairman Lee Jay-hyun was detained Monday night, on suspicion of embezzlement, breach of trust and tax evasion.

Senior judge of the Seoul Central District Court Kim Woo-soo issued the warrant of arrest for the food and entertainment conglomerate head, saying that the charges against the 53-year-old tycoon were serious enough to do so.

Kim put Lee under detention immediately after the court approved the prosecution's request for the arrest warrant for the country's 10th richest man.

Prosecutors suspect that Lee dodged some 70 billion won ($61.4 million) in income tax by hiding hundreds of billions of won in assets at home and abroad.

He was also suspected of embezzling 100 billion won of corporate funds from the groups affiliates, including its flagship food company CJ Cheiljedang, by inflating prices of raw materials.

"The prosecution has evidence on Lee's allegations. And we cannot rule out the possibility that he will destroy evidence and flee," said Kim in a statement.

The head of the countrys 14th-largest conglomerate is additionally suspected of inflicting financial losses worth 35 billion won to the group by fraudulently purchasing two buildings in Tokyo.

"I will sincerely respond (to the hearing)," the embattled chairman had told reporters earlier.

Dodging the reporters, the 53-year-old tycoon hurriedly entered the court without answering further questions.

During questioning by prosecutors last week, Lee admitted to having instructed group executives to create slush funds, but claimed that the funds were not for personal use, according to prosecution sources.

The Seoul Central District Prosecutors Office requested an arrest warrant for the businessman on Wednesday, saying "Given the seriousness of the charges against him, his detention is necessary."

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.