Hi-Mart CEO queried on embezzling

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Hi-Mart CEO queried on embezzling

Prosecutors summoned Sun Jong-koo, the CEO of the country’s leading home appliances retailer Hi-Mart, for questioning on allegations of tax evasion.

Sun, 65, appeared at the Supreme Prosecutors’ Office in Seocho-dong, southern Seoul at 9:10 a.m. yesterday, 23 days after the corporation’s headquarters were raided.

The CEO is suspected of having embezzled 100 billion won ($88.7 million) of the corporation’s funds into personal overseas bank accounts. The prosecutors said that Sun established a paper company in several tax haven European countries such as the Netherlands and Luxembourg in order to transfer the pocketed properties to his sons and daughters.

The prosecutors said that Sun sold shares of Hi-Mart to the Affinity Equity Partners, a Hong Kong-based investing company in 2005, and it was reacquired by Korean conglomerate Eugene Group, the largest shareholder of Hi-Mart, in 2007. Prosecutors said Sun and Eugene Group signed a dual contract and embezzled some 100 billion won worth of shares.

“Establishing a paper company overseas is one common M&A method,” Sun told the prosecutors during the questioning. “I never intended to evade taxes.”

On February, the prosecutors raided Hi-Mart headquarters in Daechi-dong, southern Seoul and Sun’s house simultaneously and seized accounting documents and computer hard drives as evidence.

Prior to the query, the prosecution also summoned the CEO’s 36-year-old son, Sun Hyun-seok, on Thursday and Friday. The prosecution said that Jong-koo purchased a $2 million home in Beverly Hills, California under his son’s name. The prosecutors questioned the origin of the money and investigated whether Jong-koo gave the property to his son.

By Lee Dong-hyun, Kwon Sang-soo [sakwon80@joongang.co.kr]
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