CJ Group Chairman Lee Jay-hyun said he will take full responsibility for the slush fund scandal that has engulfed the country’s 14th largest conglomerate and his family

2013-06-03

CJ chairman pledges to take responsibility

By Na Jeong-ju

CJ Group Chairman Lee Jay-hyun said Monday he will take full responsibility for the slush fund scandal that has engulfed the country’s 14th largest conglomerate and his family. “This firm is not mine. It’s yours. I will take all possible measures to protect your workplaces and help you keep dreaming,” Lee said in an email to CJ employees. “I will give up all my own interests. Your pride should not be hurt. My top priority is to help this firm maintain stable growth.” This was his first public statement since the prosecution launched an investigation into multiple suspicions surrounding him and his firm, ranging from tax evasion, stock price rigging to violations of fair competition rules. Lee’s remarks triggered speculation that he may make a strategic decision of giving up his chairmanship just as many other Korean conglomerate chiefs previously entangled in corruption have done.CJ officials have however denied the rumors.

“He talked of offering an apology to the staff and encouraged them. It’s no more or no less than that,” a CJ official said on condition of anonymity.

Lee has been serving as chairman of CJ since 2002. He is the grandson of Samsung Group founder Lee Byung-chull.

Lee’s statement came as the prosecution is digging deeper into the allegations. The Financial Supervisory Service (FSS) said it’s looking into financial transactions made through Lee’s false-name bank accounts.

He and his family members are accused of creating a slush fund. Lee is also suspected of having involved in stock price manipulation using part of the slush fund. CJ is one of the South Korean firms accused of setting up bogus companies in offshore tax havens for the purpose of tax evasion.

“We suspect CJ created hundreds of false-name accounts at its main creditor bank, Woori. It is also believed to be operating illegal accounts in Shinhan and other lenders,” an FSS official said.

The prosecution’s long awaited summon of the 53-year-old embattled boss appears to be imminent. On May 21, prosecutors raided CJ’s head office and affiliates to secure evidence. They also raided Lee’s home in Jangchung-dong, Seoul, last week.

A prosecutor said some CJ executives attempted to destroy evidence ahead of the raids.

“We issued summons to the executives, but they have failed to appear, citing health problems or tight work schedules,” the prosecutor told reporters. “We suspect they have systemically hidden or destroyed evidence. We will consider requesting arrest warrants for them if they continue to reject our summons.”