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The Korea Herald
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THE INVESTOR
March 29, 2024

Samsung

Authorities launch probe into Samsung chief’s borrowed name accounts

  • PUBLISHED :February 19, 2018 - 17:29
  • UPDATED :February 19, 2018 - 17:29
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[THE INVESTOR] Financial authorities on Feb. 19 kicked off an inspection into the brokerage accounts made under borrowed names used by Samsung Group Chairman Lee Kun-hee, searching for evidence for his alleged embezzlement and dereliction of duty.

The probe came a week after the Ministry of Government Legislation clarified that Lee’s borrowed name accounts may be subject to a fine even though they were opened before the regulation on real name financial transactions took effect.

 

Samsung Group Chairman Lee Kun-hee



The Financial Supervisory Service on Feb. 19 sent its task force members to four brokerages -- Samsung Securities, Shinhan Investment, Mirae Asset Daewoo and Korea Investment & Securities -- to look into 27 accounts used by the conglomerate chief.

Lee, who has been hospitalized since a heart attack in 2014, has long been under fire for allegedly using such accounts to evade taxes on the money which he inherited from his father and group founder Lee Byung-chull.

When the Act on Real Name Financial Transactions and Confidentiality took effect in 1993, Lee allegedly slipped through regulations by converting these disputed accounts into the names of the Samsung executives.

The ministry’s legal interpretation now states that even such accounts may be subject to sanctions.

“Borrowed name accounts may be subject to a fine, if they were opened before the financial and economic emergency order (in 1997) and later converted into the actual owner,” the ministry said in a statement delivered to the Financial Services Commission.

Out of the total 1,197 borrowed name accounts revealed so far, 27 in the four brokerages were relevant to the ministry’s definition.

“We cannot and will not look into every single one of the numerous other borrowed name accounts, except these 27 concerning Lee,” said an official of the FSS.

Earlier this month, police named Lee as a suspect in a tax evasion case, accusing him of operating some 400 billion won (US$375 million) in 260 accounts held by the group’s executive members.

The challenge for authorities, however, is that most of the transaction records have been discarded over the years. The FSS plans to have its IT and fintech experts restore the original ledger data.

Should the 27 accounts turn out to have had valid deposits back in 1993, authorities will impose a fine amounting to 50 percent of the total balance. As of the end of 2007, the corresponding accounts held some 96.5 billion won in total balance, according to the independent counsel probe in 2008.

By Bae Hyun-jung/The Korea Herald (tellme@heraldcorp.com)

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