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South Korea Indicts Chaebol Head in Tax Evasion Crackdown

Lee Jay Hyun, chairman of CJ Group, exits his car as he arrives at the Seoul Central District Court for an arrest warrant review in Seoul on July 1, 2013. Photographer: SeongJoon Cho/Bloomberg
Lee Jay Hyun, chairman of CJ Group, exits his car as he arrives at the Seoul Central District Court for an arrest warrant review in Seoul on July 1, 2013. Photographer: SeongJoon Cho/Bloomberg

July 18 (Bloomberg) -- Seoul prosecutors indicted the head of CJ Group, a South Korean food and entertainment group, for tax evasion and embezzlement as part of a government drive to crack down on corporate crime.

Lee Jay Hyun, the 53-year-old chairman of the group, was charged today after an investigation that started in May, according to the prosecutors. The group is the country’s 14th-largest chaebol, the conglomerates that dominate South Korea’s economy.

President Park Geun Hye pledged to crack down on tax evasion to help fund increased welfare spending and the country’s tax agency began 23 separate investigations in May. The government has targeted the heads of chaebol for tax evasion and embezzlement in previous years, including Samsung Group and Hyundai Group, the country’s two biggest.

Lee avoided 54.6 billion won ($49 million) in taxes and misappropriated 96.3 billion won in company assets, the Seoul Central District Prosecutors’ Office said in a statement today. Lee had used a CJ Group unit to provide collateral and guarantees for property purchases in Japan, according to the statement.

To contact the reporters on this story: Heesu Lee in Seoul at hlee425@bloomberg.net; Shinhye Kang in Seoul at skang24@bloomberg.net

To contact the editor responsible for this story: Stuart Biggs at sbiggs3@bloomberg.net

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