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Investigators are set to charge senior Samsung Group executives with corruption. Not adverse to illegal actions the executives which include among them the Chairman and his son are set to face massive fines, repayment of back taxes and possible jail terms.
The slush fund scandal which was started after a Samsung in-house lawyer blew the whistle on illegal activities is damaging for the Company who in the past 18 months have seen several executives jailed in the US for price fixing while at home others including the Chairman have been accused of bribery.
Despite the scandal Samsung Group Chairman Lee Kun-hee has failed to step down neither has the board taken action to isolate themselves from exutives under investigation.
According to web site Donga.com, Samsung Group Chairman Lee Kun-hee will face indictment without detention on charges of evading capital gains taxes of more than 150 billion won through borrowed-name accounts to purchase stocks of Samsung affiliates worth three billion U.S. dollars. Samsung Vice Chairman Lee Hak-soo and executive Kim In-joo will also be charged with conspiring with Chairman Lee.
The three men are alleged to have colluded in trying to transfer the group’s executive authority to the chairman’s son through the issuance of Samsung Everland convertible bonds and Samsung SDS bonds with warrant at below market prices.
Indictment for Lee Kun-hee
Chairman Lee faces indictment without detention for the first time in 13 years. In 1995, he was indicted with eight other conglomerate heads on charges of bribing former President Roh Tae-woo.
If Lee Kun-hee is indicted for tax evasion, he will be the first to be prosecuted for evading capital gain taxes through borrowed name accounts. The verdict will set a new judicial precedent. Thus, a fierce court battle is expected between Chairman Lee and prosecutors.
Back in the 1990s, Kim Hyun-chul, the son of former President Kim Young-sam, was found guilty of tax evasion through borrowed name accounts by the Supreme Court. He was not charged with evading capital gains taxes, however, but rather interest income taxes.
Many legal experts say the amount of tax Chairman Lee evaded is unprecedented, given that he is confirmed to have dodged more than 150 billion won in taxes.
Everland probe in 2000
In June 2000, Lee Kun-hee was embroiled in a probe into the theme park Samsung Everland. A group of 43 law professors nationwide filed a complaint with prosecutors against 33 people, including Lee. A court will soon be asked to decide if Lee must have known of the illegal attempt to transfer the group’s managerial rights to his son.
When asked about the charges facing him last week, Lee answered, “I did not order anything.” Many legal experts, however, say they are quite surprised over the decision to indict Lee, despite that the cases involving Samsung SDS and Everland are similar.
Vice Chairman Lee and Kim will also be indicted without detention on charges of involvement in the two cases.
For more on this story go to Donga
The alleged raising of one billion won in slush funds by Samsung Fire and Marine Insurance is the only case that the independent counsel will file charges of embezzlement. Though prosecutors plan to indict the company’s president Hwang Tae-sun, they have found no evidence indicating the group’s strategic planning office was involved in slush fund creation.
