Booyoung fined for secret bank accounts of chairman, wife

Construction company Booyoung was fined 32 million won ($30,080) because its affiliates maintained bank accounts for Chairman Lee Joong-keun, 77, under assumed names, the Fair Trade Commission said Wednesday.

It recommended criminal proceedings against the medium-sized construction and leasing conglomerate.

The accounts were used to manage 3 million shares of Booyoung affiliates for three decades before they were put in the names of Lee and his wife in 2013.

According to FTC, Lee opened bank accounts in other people’s names when he started Samsin Engineering in 1983, which became Booyoung. Lee reportedly was legally banned from making financial transactions in his own name.

He used the names of relatives and executives of his affiliates.

More accounts were started when affiliates were created between 1989 and 1998. His wife used the same method of banking when she started Booyoung Entertainment.

Through those accounts, Lee and his wife owned a 3.5 percent stake in Booyoung; 88 percent of Gwangyoung Construction; 100 percent of Namkwang Construction; 100 percent of Booyoung Housing; 35 percent of Dongkwang Housing and 60 percent of Booyoung Entertainment.

Even when Booyoung Group was included in a group of major businesses restricted from owning affiliates through cross shareholdings in 2002, Lee did not report to the government the stocks that were managed through the accounts, a clear violation of the antitrust law.

Conglomerates with assets exceeding 10 trillion won are not allowed to own affiliates through cross shareholdings.

“Chairman Lee between 1983 and 2013 has managed bank accounts under the names of 73 other people,” said Yook Sung-kwon, FTC director.

Last month, Lee was arrested on charges of embezzlement and negligence with nine of his former or current executives. The amount embezzled was allegedly 430 billion won.

Lee is accused of creating slush funds, illegal profiting by inflating construction costs and dodging taxes. Lee is also accused of putting relatives on payrolls.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]