Chun Doo Hwan’s brother-in-law is detained

Prosecutors have locked up the brother-in-law of former President Chun Doo Hwan on charges of massive tax evasion.

Lee Chang-seok, younger brother of the former first lady, became the first relative of Chun to face pre-trial detention since the prosecution decided in May to go after the former military strongman’s hidden wealth. Lee was sent to the Seoul Detention Center Monday night.

Judge Kim Woo-soo of the Seoul Central District Court issued the warrant around 10:30 p.m. on Monday, citing that prosecutors presented enough ground for their charges.

Kim also said there was concern about evidence destruction and flight risk.

Lee is suspected of evading 12.4 billion won ($11.04 million) in taxes when he sold land in Osan, Gyeonggi, in three deals since 2006. Lee inherited the properties from his father, Lee Kyu-dong, the suspected money manager of the former president.

Lee allegedly sold a large part of the Osan properties to a developer at a price of 58.5 billion won, but reported to the authorities that the land was sold for 32.5 billion won, the prosecution said.

By making the allegedly false report, he evaded 6.5 billion won in capital gains tax.

He was also accused of illegally disposing of other properties in Osan worth 20 billion won. The prosecutors said Lee allegedly divided the land into two plots and gave them to two companies owned by Chun’s second son, Jae-young.

The paperwork shows the selling price of the plots as 1.3 billion won and 3.5 billion won. He allegedly evaded 6 billion won in tax, the prosecution said.

The prosecutors also said Lee allegedly funneled at least 30 billion won of the money raised through the Osan land deals to the Chun family.

At a warrant hearing Monday, Lee insisted that all the deals were legitimate. He claimed that the conditions of the sale were changed several times, but the sale of the properties was lawful.

It was the first time in 25 years that Lee was detained in a criminal probe. In 1988, he was detained by the prosecution on charges of embezzlement and tax evasion as a part of an investigation into corruption during Chun’s time in power.

He was convicted of the charges but released in 1991 with a suspended jail term. He was questioned in 1995 and 2004 when the prosecution investigated Chun’s hidden wealth, but he was not detained in those times.

The special investigation team at the Seoul Central District Prosecutors’ Office said it will try to prove the link between Lee’s Osan properties and Chun’s hidden assets.

If the prosecution fails to prove the connection, Lee can only be indicted for tax evasion and the government cannot confiscate the money raised from the properties.

“Our ultimate goal is collecting Chun’s outstanding fine,” said Lee Jin-han, a senior prosecutor of the Seoul Central District Prosecutors’ Office.

Chun rose to power in 1980 through a military coup and ruled the country until 1988. In 1997, the Supreme Court convicted him of accepting massive bribes and running slush funds during his presidency and ordered him to pay a fine of 220.5 billion won.

He refused to pay the outstanding balance of 167.2 billion won, and the National Assembly approved a special law in June to allow the government to go after the assets of his family if they were proven to originally come from Chun.

The prosecution will interrogate Lee further and begin questioning of Chun’s sons as early as this weekend.

The prosecution already seized last week another 62 hectares of land in Osan that Lee surrendered to Chun’s second son. The prosecutors believe that the actual owner of the land is the former president or that his hidden wealth was part of the deal.

The prosecution also seized another piece of expensive land in Hannam-dong, Seoul, on Monday. The land is suspected to be another Chun property put under the name of his nephew, Lee Jae-hong.

By LEE DONG-HYUN, KIM KI-HWAN [myoja@joongang.co.kr]