Samsung Chairman Under Investigation Again, This Time For $4.2 Billion Tax Dodge
Samsung’s Chairman, Lee Kun-hee, is under investigation by Korean authorities for allegedly using borrowed names to withdraw money from the company in order to avoid massive taxation of the funds. The process has been used to allow Kun-hee to transfer wealth from his father, Lee Byung-chull, who is the founder of Samsung and is said to amass approximately $4.2 billion.
According to The Korea Herald, federal authorities within Korea are actively trying to claw back tax on the total amount of money that they believe to have been illegally withdrawn using the borrowed names.
In fact, South Korea actually has an Act on Real Name Financial Transactions and Confidentiality, which allows a tax of up to 90% to be levied against income and dividends which have been obtained using the aforementioned process. When you’re talking about monetary amounts of $4.2 billion, taxation at that rate amounts to a lot of money.
Official investigations into the family behind Samsung isn’t exactly new. Nor is the personal investigation into the company’s Chairman. Back in 2008, an investigation into Lee Kun-hee uncovered more than 1000 accounts which had purposely been set up purely with the aim of transferring wealth. For one reason or another, the public eye has been taken off Lee for the last nine years but the governing political party has now decided to reopen the investigations and take it seriously. The general consensus is that Lee will be taxed a monetary amount based on the findings but the ruling party is also ready to take legal action if the country’s tax agency puts in place a mediocre fine.
Whatever the outcome, it’s highly unlikely that the controversy surrounding the controlling Samsung family is likely to disappear anytime soon. This is the second major investigation into the company’s Chairman in the last decade, which seems bad enough until you actually take into consideration that his own son has also recently been sentenced to five years in prison as part of a scandal which seen the country’s former president arrested and thrown out of office.
The family has been responsible for turning Samsung into the global power that it currently is, but could that same family’s misdemeanors continue to bring shame to the company?