CJ chief is accused of evading 51 billion won in taxProsecutors investigating CJ Group Chairman Lee Jay-hyun for stashing money abroad allege that the head of the country’s 14th-largest conglomerate evaded a total of 51 billion won ($45.2 million) in taxes.
According to the Seoul Central District Prosecutors’ Office, Lee purchased CJ bonds with warrants, which give the bondholder the right to buy a certain number of shares at a fixed price for a specified period of time, through shell companies in the British Virgin Islands including Chishan Development and Topridge in 1999.
By exercising his preemptive rights in March 2004, he eventually acquired 1.56 million shares of the group, worth 60 billion won, under the name of Chishan Development.
He then sold the shares from April 2004 and September 2009 for a total of 166 billion won, which gave him about 100 billion won in profit, which allegedly were not reported to the country’s tax office.
The prosecution said Lee evaded about 22 billion won in income tax through those transactions.
In addition, Lee also purchased CJ Fresh Way’s convertible bonds through a foreign finance institution, EFG Private Bank SA, under an assumed name in November 2004 and eventually acquired 1.3 million of the company’s shares for 20 billion won by February 2007.
The prosecution said Lee managed the shares under a false name and also earned about 800 million won in dividends between 2008 and 2012, and didn’t pay tax on that income.
In 2007, the prosecution said, Lee established a shell company, Topridge, in the British Virgin Islands.
He opened an account at the Singapore branch of Swiss Bank UBS in the company’s name and deposited hundreds of billions of won.
He then purchased 9.1 billion won worth of shares in CJ Group and CJ Cheil Jedang from November 2008 to July 2010 through an account he created in Korea. He later sold them for 14.1 billion won and didn’t pay tax on that 5 billion won capital gain.
The prosecution added that a charge of breach of trust will likely be slapped on Lee for incurring a 35 billion won loss to CJ.
Allegedly, he used 60 billion won in the company’s money from 1998 to 2005 for his personal use and purchased two buildings in Japan by borrowing about 24 billion won from Shinhan Bank’s Tokyo branch under the name of the conglomerate’s Japan office, PAN Japan.
Sources in the prosecution said most of the investigation of Lee is finished and it is arranging a schedule to summon the chairman for questioning.
BY SHIM SAE-ROM, KWON SANG-SOO [firstname.lastname@example.org]