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Lawmakers pushing to bolster real-name financial transaction law

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(Globalpost/GlobalPost)

SEOUL, Aug. 6 (Yonhap) -- South Korean lawmakers are moving to beef up the country's law on real-name financial transactions amid authorities' probe into politicians and businessmen's suspected creation of slush funds and alleged tax evasion, experts said Tuesday.

South Korea introduced the real-name financial transaction scheme via a presidential order on Aug. 12, 1993, under which it has become illegal to use borrowed names for financial transactions.

The move was aimed at boosting transparency in doing financial transactions and cutting cozy relations between politicians and businessmen.

Lawmakers from the ruling and opposition parties are now moving to plug a loophole in the current law as it cannot prevent the opening of borrowed-name accounts by agreements among two parties in transactions.

Currently, violators face up to 5 million won (US$4,490) in fines only when they make financial transactions using other people's names without consent.

The drive to beef up the real-name transaction law is connected to prosecutors' ongoing investigation into politicians and conglomerates' suspected creation of slush funds and tax evasion allegations.

Last month, food and entertainment conglomerate CJ Group Chairman Lee Jay-hyun was accused of creating slush funds and evading taxes. Lee became the first tycoon to be indicted under the government of President Park Geun-hye, now in office for over five months.

Former President Chun Doo-hwan, who took power through a military coup in 1979, is suspected of hiding massive slush funds that he has stashed away in overseas bank accounts under other people's names. He refused to return his illegally accumulated assets to state coffers despite an order by the top court, arguing that he is penniless.

A list of South Koreans who are suspected of setting up shell companies in offshore tax havens to evade taxes has been released by the Korea Center for International Journalism, an online news outlet.

A revised bill submitted by several lawmakers is expected to be dealt with in the parliament's regular session in September. But opponents against the bill claimed that the move is feared to unjustly damage people, including those who have no intentions to do illegal transactions, but want to open accounts by borrowing their families' names.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/130806/lawmakers-pushing-bolster-real-name-financial-transaction-la