FSC asks for advice on Samsung accounts caseThe nation’s top financial authority has taken its first steps in deciding whether it will slap fines on Samsung Group Chairman Lee Kun-hee for bank accounts he controlled under other people’s names.
The Financial Services Commission on Wednesday said it asked the Ministry of Government Legislation to clarify regulations penalizing people with such accounts.
The ministry’s interpretation of the law is expected to take a month. The request, which was made on Tuesday according to the FSC, was whether the actual owner should be subjected to a fine if they changed the name on the account after the Real Name Financial Transaction Act was enforced in 1993.
Under current law, bank accounts found to have been opened under false pretense could be faced with a maximum 90 percent tax on interest and dividend incomes as well as a fine of as much as 50 percent of the estimated financial assets.
The issue was raised earlier last year by Rep. Park Yong-jin of the governing Democratic Party and was later backed up by a FSC task force composed of scholars and private sector experts. In December, an advisory Finance Administrative Innovation Committee led by Seoul National University professor Yoon Suk-heun proposed the FSC follow up on whether Samsung kept a promise made in 2008 when the hidden bank accounts were first revealed to fix the mess. It called for income taxes and fines to be levied on the Korean conglomerate.
“In order to prevent any blind spot in the law and to uphold the Real Name Transaction Act, we advised [the FSC] to aggressively consider imposing a fine even on the bank accounts that were opened before the regulation was enforced,” said the SNU professor Yoon last month.
In 2008, a special prosecutor investigating Samsung Group found that the conglomerate had 1,199 bank accounts valued at 4.54 trillion won ($4.27 billion) that actually belonged to Chairman Lee but were opened under other people’s names. Among those accounts, 20 were opened before the regulation was imposed.
Samsung immediately made a public apology, promising to put the proper names on the accounts, paying the proper tax and donate the money in the accounts to charity. The Democratic Party’s Park, during a National Assembly audit last year, claimed none of the promises were kept and Samsung closed the accounts and withdrew 4.4 trillion won. Despite the pressure, the FSC has been reluctant to take action. FSC Chairman Choi Jong-ku has agreed on the idea of imposing income taxes on Lee’s bank accounts, but was reluctant to impose fines.
“If a fine is imposed on bank accounts opened in other people’s name, it would not only be applied to Samsung Group but to all bank accounts of such nature,” Choi said late last month during a press conference.
“Not all such accounts are opened for such dubious purposes, which could be a problem,” said the FSC chairman. He pointed out that parents open bank accounts in their children names and some people open joint accounts with former classmates.
The FSC also pointed out that while some bank accounts may belong to the Samsung chairman, they were run in the name of actual persons. Before the law was made, some bank accounts were opened in entirely made-up names. As long as an actual person is verified, it is not a violation of the law, the FSC said, citing a previous high court ruling. Choi said that he considers it appropriate to have a legislative and policy discussion on what to do with bank accounts that were opened in other people’s names before the Real Name Financial Transaction Act was implemented.
BY LEE HO-JEONG [email@example.com]
More in Industry
As profits boom, big Korean companies reduce head counts
Hyundai Heavy confirms bid to buy stake in Doosan Infracore
It's a wrap
Joining hands for MOU