Waters bloodied as tax watchdog hunts loan sharks

A 59-year-old loan shark surnamed Choi levied 120 percent annual interest on 20 million won ($17,191) he loaned to a businessman specializing in interior construction in 2010.

However, after the interest began adding up and the borrower failed to pay, the loan shark took as compensation the man’s jeonse (long-term rent) deposit, breaking his family up.

The interior businessman’s wife had to find a job washing dishes and serving them at a restaurant to make ends meet.

In despair, the businessman committed suicide.

Another clothing shop owner borrowed 10 million won from Choi. But Choi took the deposit on the store that was put up for collateral by force after repeatedly beating and verbally threatening the shop owner.

The former store owner now works in construction.

Choi has made 3.3 billion won on the interest he collected and drives around in a Mercedes Benz, yet he did not report earnings to the tax authority.

The National Tax Service said it has not only demanded 1.6 billion won in back taxes from the loan shark, but also reported him to authorities on charges including fraud.

If found guilty, Choi could face more than five years in prison.

Yesterday, the tax office said it has imposed a total of 159.7 billion won in fines on 253 loan sharks that used violent and cruel practices, including physical assault, verbal threats and even kidnapping.

One loan shark imposed an annual interest rate of 360 percent. Another sent a college student who failed to repay her debts to pay them off by working in a depraved establishment.

The loan shark threatened the college student that he will inform her parents about the illegal loan she borrowed.

The 253 loan sharks have been under investigation since 2008.

The tax agency made it clear that it would further strengthen its crackdown on private lenders that employs violent and illegal means to pocket huge profits.

“The government will establish a joint task force that would root out illegal private finances,” said a tax agency official.

“We will do our utmost to recover taxes from illegal private lenders.”

Additionally the tax office said it started to investigate 123 private lenders across the country suspected of tax evasion.

Currently, by law the maximum annual interest on loans taken out from a registered private lender is 39 percent, while the interest on loans borrowed from nonregistered private lenders is 30 percent.

By Lee Ho-jeong[ojlee82@joongang.co.kr]