Korean prosecutors are expanding their probe into CJ Group’s slush fund by questioning chiefs of the conglomerate’s overseas operations in the United States and Indonesia
June 17, 2013 Leave a comment
2013-06-16 19:18
CJ’s US unit under probe
By Kim Se-jeong
Prosecutors are expanding their probe into CJ Group’s slush fund by questioning chiefs of the conglomerate’s overseas operations in the United States and Indonesia.
Sources from the Seoul Central District Prosecutors’ Office said Sunday that tens of billions of won in illicit funds could be involved.
Already, CJ’s offices in Hong Kong, Japan and China are under investigation.
“We are investigating to determine the exact amount of the slush fund and for what the money was raised and spent,” said an official from the prosecution office.
He said that some of the money CJ siphoned off through paper firms in tax havens was channeled to its U.S. branch.The chief of CJ’s U.S. operations, identified as Kim, was recently summoned for questioning, while a man surnamed Ha, who served as chief of its Indonesian operations, was also questioned.
The prosecutors are focusing on how Group Chairman Lee Jay-hyun was involved in raising the slush fund and dodging taxes.
Lee is suspected of siphoning off up to 70 billion won in corporate funds and dodging 51 billion won in taxes from 1998 to 2005.
At the same time, he is being investigated over two buildings he purchased under a “borrowed name” in Japan and 35 billion won in damages he incurred for his firm.
According to officials, the group sent the money to the U.S. subsidiary by forging documents regarding its overseas investments since 2008.
The U.S. subsidiary has been used as a base to manage its slush fund raised through fraudulent accounting and paper companies in other countries, the officials said.
The prosecutors said the money was disguised as executives’ pay before being transferred around.
The investigation is now focusing on finding the use of the money at the two overseas offices; and whether it found its way back into Korea or was wired to a third overseas branch.
The investigation began during the Lee Myung-bak administration, but was abandoned.
The prosecutors say CJ’s “shell” companies, Topridge and Chishan Development, in the British Virgin Islands, were established to hide the money.
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