Evidence found of assets concealed by former president’s son

Posted on : 2013-06-04 15:05 KST Modified on : 2019-10-19 20:29 KST
Son of Chun Doo-hwan apparently set up a paper company in a tax haven while investigation was going on

By Ko Na-mu and Song Kyung-hwa, staff reporters

Controversy has been spurred by revelations that the eldest son of former President Chun Doo-hwan set up a paper company in a tax haven during a 2004 investigation into his father’s slush fund.

Some are now questioning whether Chun Jae-guk, 54, set up the paper company as a way of hiding his father’s assets. The timing of the company’s establishment also matches information about other assets of the former President‘s that came into the spotlight during the investigation and trial of second-son Jae-yong, 49, on charges of tax evasion.

According to a June 3 report by the investigative journalism organization News Tapa, Chun Jae-guk founded a company called the Blue Adonis Corporation in the British Virgin Islands, a well-known tax haven, on July 28, 2004. Two days later, his younger brother Jae-yong was sentenced to two years and six months in jail and a fine of 3.3 billion won (US$2.9 million) for evading the gift tax, a violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.

The younger Chun claimed that a portion of securities valued at 7.35 billion won (US$6.6 million) was received from his maternal grandfather, former Korean Senior Citizens’ Association president Lee Kyu-dong. But the court concluded that it was actually slush funds belonging to the former President.

Given the time needed to set up a paper company, Chun Jae-guk’s preparations are believed to have begun a few months before July 2004. The fact that an investigation was under way at the time strongly suggests that his aim was to conceal assets.

Chun Jae-yong was unexpectedly arrested on February 11, 2004, by the Central Investigation Division of the Supreme Prosecutors’ Office. Investigation under charges of tax evasion uncovered leads toward a possible secret fund belonging to his father, revelations that earned major press at the time and ratcheted up public pressure on the prosecutors. On February 27, they submitted a written indictment to the court for Chun Jae-yong, who began a heated legal battle that lasted until his older brother set up the paper company on July 28. On March 17, the younger Chun sibling argued in court that his funds had “nothing to do” with any secret fund of his father’s. He submitted a petition and statement of apology to ask for leniency that May, but was found guilty in his first trial. He appealed the ruling on August 2.

Meanwhile, his brother moved quickly. At an August 13 board of directors’ meeting, a motion was approved to set up an account in the same of Blue Adonis at the Singapore branch of Arab Bank. Chun Jae-guk’s sense of urgency was evident in an email exchange between the Singapore office and an employee in the Virgin Islands. When Chun’s assets were temporarily frozen as the account’s creation was delayed, an employee in Singapore wrote a message to the Virgin Islands employee saying that Chun was “very upset” and that “the matter is now very urgent.”

 

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