S Korean company chairman indicted over slush funds, tax evasion

S Korean company chairman indicted over slush funds, tax evasion

SOUTH KOREA - The chairman of food and entertainment giant CJ Group was indicted Thursday for amassing massive slush funds in Korea and abroad, evading tax and embezzling company funds for personal use.

The Seoul Central District Prosecutors' Office arrested Lee Jay-hyun on July 1 on charges of dodging some 54.6 billion won (S$60.4 million) in taxes by creating secret funds under borrowed names at home and abroad.

The 53-year-old business tycoon is also accused of misappropriating 96.3 billion won of the group's funds and inflicting 56.3 billion won worth of financial damage to the company by unlawfully buying two buildings in Tokyo.

Lee, a nephew of Samsung Electronics chairman Lee Kun-hee and the nation's eighth-richest man, has been under investigation since May for allegedly hoarding secret funds at home and abroad using borrowed-name accounts, ghost companies and fraudulent accounting.

CJ offices were raided and key officials including the chairman were summoned by the prosecution for questioning.

After a two-month-long probe, Lee has become the first conglomerate chief to be indicted under Park Geun-hye's government. President Park previously said she planned to introduce stricter penalties with jail sentences for chaebol owners for embezzlement or corruption. She reiterated that presidential pardons for business leaders would be limited as well.

"It is the first case of offshore tax evasion committed by a conglomerate chief," said Park Jeong-sik, a senior prosecutor in charge of the case.

"We have taken stern action against the chaebol boss who took company assets as personal property, misappropriated company funds and evaded massive amounts of tax," he said.

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