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Samsung chairman takes $4 billion without paying taxes

Staff Writer |
Samsung Electronics chairman Lee Kun-hee, chief of Samsung Group withdrew almost $4 billion from borrowed accounts without paying taxes and penalties, a lawmaker of the ruling Democratic Party said.

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Choi Jong-ku, chairman of the Financial Services Commission (FSC), the country's financial regulator, told a parliamentary inspection of government offices Monday that the FSC will re-examine all of the withdrawal processes in consultation with the Financial Supervisory Service (FSS), the financial watchdog.

Based on the FSS documents submitted to Rep. Park Yong-jin of the Democratic Party, the lawmaker said Chairman Lee withdrew nearly 4.4 trillion won ($4 billion), including 4.1 trillion won in 957 securities accounts and 293 billion won in 64 bank accounts, without switching the borrowed names into the real one.

All of the accounts surpassing 1,000 in number were opened in borrowed names.

In 2008, an independent counsel found Chairman Lee's accounts under the names of 486 former Samsung executives, confirming the money inherited from Lee's father, Samsung founder Lee Byung-chull.

In April 2008, Chairman Lee apologized for the borrowed accounts, promising to change the borrowed names into the real one and to pay all of the unpaid taxes.

He also vowed to spend the remaining money, left after tax payment, on a "useful work," rather than on himself and his family.

However, the billions of dollars of funds under the borrowed names was withdrawn without being changed into the real name and without paying taxes and penalties.

Under the real-name financial transaction system, launched in August 1993 by an emergency order of then President Kim Young-sam, 99 percent of income tax is required to be levied on interest and dividend income earned through the borrowed-name assets.

As high as 50 percent of the value of assets under the borrowed names is required to be fined as a punitive measure under the real-name financial transaction system.

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