Prosecutors begin investigating Hyosung`s alleged tax evasion

Prosecutors began investigating Hyosung Group`s alleged tax evasion worth hundreds of billions of won (tens of million of U.S. dollars). The Seoul Central District Prosecutor`s Office said Tuesday it allocated a case to Special 2 Branch that Seoul Regional Tax Office charged Hyosung`s Chairman Cho Suck-rae and executives for tax evasion.

Seoul Regional Tax Office began tax investigation on Hyosung in late May and opened a tax infringement screening committee last Wednesday and decided to collect omission tax and report to prosecutors. The omission amount is known to reach tens of millions of dollars.

In face of mounting bad loans at overseas business in the wake of the 1997 currency crisis, Hyosung tried to hide this and is alleged to have committed an accounting fraud of corporate tax evasion. Tax authorities are also known to have found circumstances that the Cho family committed acquisition and income tax evasion by managing a borrowed-name property worth over 100 billion won (90 million dollars) since the 1990s.

The National Tax Service is also known to have investigated whether Hyosung created secret funds through tax evasion through overseas branches or internal deal through fake affiliates. Prosecutors will examine accuse content and obtain information and testifier summon. Hyosung has 11 trillion (10 billion dollars) in assets and is the 36th largest conglomerate in Korea. Chairman Cho and former President Lee Myung-bak are fathers-in-law.

Seoul Central District Prosecutors` Office`s Special 2 Branch carried out CJ Group`s secret fund investigation early this year, and arrested Chairman Lee Jae-hyun with embezzlement and misappropriation. The National Tax Service is promoting a tax probe on Daewoo Construction & Engineering, Hyundai Motor and POSCO. In the year`s first half, it executed a tax probe on LG Corporation, SK Networks and Lotte Shopping. The tax agency may accuse other large companies if they find tax evasion cases.