Arrest warrant sought for Hyosung chairman

Prosecutors said Friday they are seeking an arrest warrant for the head of family-run conglomerate Hyosung Group on suspicions that he created large amounts of slush

funds and evaded taxes.

Chairman Cho Suck-rai, who was summoned by prosecutors twice earlier this week for questioning, is facing multiple charges including embezzlement, tax fraud and breach of trust, prosecutors said.

"Senior prosecutors at the Seoul Central District Prosecutors' Office have decided to seek the warrant for (Cho) after a careful deliberation," a prosecutor close to the investigation said.

The country's 26th-largest business group is suspected of cooking the books for the past decade to cover up losses incurred during the 1997-98 financial crisis. It has allegedly evaded several hundred billion won in corporate taxes through the accounting fraud.

Prosecutors alleged that the conglomerate has kept shares under borrowed names since the 1990s to evade transfer and income taxes worth more than 100 billion won (US$94 million).

Hyosung is additionally suspected of establishing shell companies in tax havens in the 1990s with money borrowed from local banks and having made illegal profits by trading shares on the local stock market with secret funds from the offshore paper firms.

The Seoul Central District Court is scheduled to hold a hearing Tuesday to decide whether to issue an arrest warrant for the chairman, court officials said.

The probe began in late September when the country's tax agency filed a complaint against Cho and several other executives with the prosecution for allegedly leading the tax evasion scheme.

Prosecutors have so far raided the homes and offices of Cho and other executives and grilled two of Cho's three sons -- Cho Hyun-joon, the oldest son and president of Hyosung Group, and Cho Hyun-moon, the second son.

The group, with more than 11 trillion won in assets, has businesses mainly in the fields of energy and heavy industry. (Yonhap News)