SEOUL, May 27 (Yonhap) -- Prosecutors are tracing records of CJ Group's stock trading as part of their probe into allegations that the local food and entertainment conglomerate amassed a massive slush fund offshore, sources close to the investigation said Monday.
The Seoul Central District Prosecutors' Office believes that the country's 14th-largest conglomerate allegedly used slush funds secretly held in borrowed-named offshore bank accounts to purchase shares of its domestic subsidiary, they said.
Investigators are looking into trading records of CJ Group and its subsidiary CJ Cheiljedang Corp. from 2004, 2007, and 2008 after receiving detailed records from the country's stock bourse operator, they said.
Prosecutors suspect CJ Group Chairman Lee Jay-hyun reaped a huge amount of profits by using offshore slush funds to purchase shares of CJ Cheiljedang in 2007, they added.
The extensive probe is looking into other suspicions that owners of CJ Group have engaged in organized tax evasion activities through funneling huge amounts of secret money to their offshore accounts in Hong Kong and the British Virgin Islands, a well-known tax haven.
To be in step with the law enforcement authorities, the country' financial watchdog began its own investigation to see if any local company had manipulated stock prices in the Seoul market by pretending to be foreign money based in a tax haven country.
The probe by the Financial Supervisory Service centers on allegations of unfair business practices that include stock price manipulation and use of undisclosed inside information.
The case involving CJ Group dates back to 2008, when one of the group's finance officers was accused of hiring a hit man to kill a private moneylender.
Police revealed that the chairman had amassed large funds under borrowed names, resulting in him paying 170 billion won (US$151 million) in taxes. However, the National Tax Service did not file criminal complaints against the company at the time.
The prosecution is currently looking into how much the chairman amassed in borrowed-name accounts and whether he paid 170 billion won in taxes in 2008 on the secret fund the group created overseas.
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