The Financial Supervisory Service on Monday began its investigation of CJ Group for stock price manipulation, and violation of the foreign exchange law and real-name transaction law.
CJ Group chairman Lee Jay-hyun offered an apology to its executives and employees for damaging their pride in connection with the prosecution’s probe into the conglomerate.
The top financial regulator is looking into the hundreds of CJ accounts under borrowed names at Woori Bank as well as the conglomerate’s alleged tax evasion through tax havens.
“We began a special inspection on CJ’s main bank, Woori Bank, for suspected violation of the real-name transaction law,” said an FSS official.
“This could reveal CJ’s possible violation of the foreign exchange law, naturally leading to an all-out investigation (into CJ).”
The prosecution recently found a lead that CJ chairman Lee spent some of the money he siphoned off to Swiss-based UBS Bank’s Hong Kong branch in setting up a company under a borrowed name to purchase real estate in Japan.
The prosecution said on Monday it has warned against CJ’s attempts to destroy evidence and has resummoned the CJ officials who did not show up for questioning.
The prosecution is considering requesting arrest warrants if officials at CJ units in Hong Kong, China and Japan disobey the summons again.
The FSS suspected the corporation may have been used to launder slush funds and assets under borrowed names as well as to increase assets.
The prosecution handed over to the FSS a list of CJ accounts under borrowed names, which are likely to have been opened with help from Woori Bank staff.
The financial watchdog is also zeroing in on whether the Lee family manipulated stock prices or used undisclosed information to unfairly gain profits in their purchase of treasury stocks.
The FSS is currently scrutinizing companies such as Hyosung, OCI and DSDL as it investigates some 20 individuals including Hanjin Shipping chairwoman Choi Eun-young who are suspected of illegal foreign exchange transactions through tax havens.
It is the first time Korean financial authorities are looking into not just individuals but also companies for possible violation of the FX law via tax havens.
The FSS suspects the companies in question of assisting the individuals’ transactions with offshore paper companies.
The regulator plans to wrap up the probe into illegal financial transactions including that of CJ within a month or two. It is to impose fines or take other punitive actions and report its findings to the National Tax Service and the prosecution for further punishment.
In his email sent to the whole staff, chairman Lee wrote, “I will take responsibility for any measure that was taken for the group’s stable management.”
“I will take responsibility if the staff who helped me in the process is found with fault. I will make every effort to keep the staff and the company from being hurt due to my lack of discretion,” he said. They were Lee’s first comments on his position since the prosecution opened a probe into him and his group last month.
By Kim So-hyun (
sophie@heraldcorp.com)
