By Na Jeong-ju
An online news outlet that is working with the U.S.-based International Consortium of Investigative Journalists (ICIJ) disclosed the first batch of 245 Koreans who it claims are operating paper companies in offshore tax havens.
They include Lee Soo-young, chairman and CEO of OCI, a major chemical firm; Lee’s wife; the wife of former Korean Air Vice Chairman Cho Joong-geon; Cho Wook-rae, chairman of a real estate developer DSDL; and Cho’s eldest son.
“We’ve confirmed that they set up their own paper companies on the British Virgin Islands,” Kim Yong-jin, head of the Korea Center for Investigative Journalism, said in a news conference. “OCI Chairman Lee admitted to our staff that he had hundreds of thousands of dollars in his offshore account.”
The revelation came after the ICIJ dropped a bombshell statement in early April that it had obtained more than 2.5 million documents showing secret bank accounts belonging to high-profile, powerful people around the world in the Virgin Islands.
Kim said a total of 245 South Koreans were found to be operating paper companies in the islands. He said 159 of them used their addresses in Korea to set up the bogus companies, and the remaining 86 used addresses in Hong Kong and Singapore. Some people had up to five paper firms.
“We will unveil more names once or twice a week beginning May 27 after more fact checking. It may take about a month to give the full list,” Kim said.
Kim said on the list are many corporate executives who are well known to the public.
“Some paper firms might have been set up legally. That’s why we need to cross-check. However, we believe most firms are used for dodging taxes and keeping secret funds,” he charged.
Asked if he will provide the information to the National Tax Service (NTS), Kim said he won’t do so because he and the ICIJ work independently.
“We agreed with the ICIJ not to cooperate with the government. We pursue independent, investigative journalism,” Kim said.
OCI Chairman Lee is a former head of the Korea Employers Federation, a major business lobby. He and his relatives were investigated in 2009 by prosecutors on suspicions of unauthorized stock trading, but only his son was charged.
Lee and his wife reportedly set up a ghost firm, named Richmond Forest Management, in the Virgin Islands in 2008.
Industry sources say the NTS is currently conducting preliminary investigations into a dozen companies over suspicions of offshore tax evasion. The office will launch formal audits that may take several months, should any evidence be found.
“The targeted firms are facing allegations that they have dodged taxes on offshore transactions, or operated hidden accounts in countries used as tax havens,” one source said.
The source refused to disclose whether OCI was one of them, only saying they include some big firms.
An NTS spokesman said a crackdown was now in progress, and back taxes will be levied on violators after the investigation ends.
“We’ve asked countries that are popular for tax evasion to provide information about Korean firms and individuals that have accounts there,” the spokesman said. “We are using all available means to discover secret funds hidden abroad by Koreans. We hope we will be able to unveil the names of violators as quickly as possible.”