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FSS launches inspection into forex details of suspected tax evaders

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(Globalpost/GlobalPost)

SEOUL, May 30 (Yonhap) -- The financial regulator said Thursday it has launched an inspection into foreign exchange dealings by suspected tax evaders recently exposed by local online media, amid growing allegations over their offshore tax haven accounts.

The Financial Supervisory Service (FSS) has started looking into details on foreign exchange transactions by 12 suspected tax evaders, mostly high-profile Korean business leaders, to find out whether they have violated related law, its officials said.

According to local foreign exchange law, a Korean national must report to his or her bank any direct investment, purchase of property or financial transactions made outside the country prior to the dealing.

The FSS, assuming that the majority of the suspected have not properly complied with the rule, has launched an all-out inspection into their foreign exchange transaction details, it said.

The list of 12 businessmen came as an independent online-based media organization here started unveiling their names last week, as those who have set up paper companies in popular tax haven regions such as the Virgin Islands and the Cook Islands, implying that they may have hidden slush funds or avoided taxes through proxy accounts created under the bogus firms' names.

The revelations made by the Korea Center for Investigative Journalists (KCIJ) have prompted local authorities to kick off their own probes into possible tax evasion and concealment of secretive money.

The FSS plans to obtain financial statements from local foreign exchange banks that show detailed transactions made by Korean nationals who hold accounts in the Virgin Islands, with the results of the inspection to be released within the next couple of months, it said.

Anyone found to have violated the law will be punished, and the findings will be shared with taxation and law enforcement agencies for further investigations, the FSS added.

Later in the day, the KCIJ revealed a fresh list of 10 other shell companies established and owned by Koreans since as early as the 1990s.

Kim Seok-ki, a former president of now-defunct financial firm Central Banking Corp., is found to have five different paper companies, including the Premier Corporation Inc., set up in the Virgin Islands from 1993 to 2005, according to the KCIJ.

Of the five, three had Kim and his wife Yoon Suk-hwa, a famous veteran actress in Korea, listed as the companies' largest shareholders, the document said.

Kim became the head of Central Banking in 1999 before the firm was liquidated due to bankruptcy. He was also indicted in 2000 for an alleged foreign exchange law violation and embezzlement, but the prosecution later closed the case after levying a minor fine.

One of his companies, Energylink Holdings Ltd, was jointly set up by Lee Soo-hyung, an incumbent executive at Samsung Electronics Co., the KCIJ said.

The list has drawn public attention as it contains some incumbent and former heads and executives of family-owned conglomerates, known here as chaebol, so far including Choi Eun-young, the chairwoman of shipping giant Hanjin Shipping Co., and Lee Soo-young, the chairman of polysilicon maker OCI Co., among others.

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