7.3 Billion Won Retained by Jae-yong Came from Chun Doo-hwan’s Slush Fund

The court ruled that 7.3 billion of 16.7 billion won in housing bonds that former President Chun Doo-hwan’s second son, Jae-yong, kept came from his father’s slush funds.

“He did not pay gift taxes after receiving 7.3 billion won in bonds from his father,” said the Seoul Central District Court yesterday regarding Jae-yong who was arrested and indicted for dodging 7.1 billion won of gift taxes, and sentenced him to two and a half years in prison and fined him 3.3 billion won.

However, the court found him not guilty regarding the remaining 9.4 billion won of the 16.7 billion because of a lack of evidence on whether he had received it from either his father or his grandfather, Lee Gyu-dong.

“The fact that the money to purchase 7.3 billion won in bonds came from his father’s bank account and increasing it to 12 billion won with only two billion won of investment for two years from 1988 proves that former President Chun gave him the money,” said the court.

It added, “He and his maternal uncle Lee Chang-seok’s claim that the money came from his wedding celebration money is groundless. They even failed to explain how the money was put into Chun’s account.”

The court explained, “It is reproachable for him to conceal the fact that he received some of Chun’s slush funds in bonds while Chun paid only a small portion of the 220.5 billion won forfeit that he must pay. Tax authorities will impose a proper gift tax on him, separate from the fines.”

Jae-yong was arrested and indicted in February for dodging 7.1 billion won of gift tax after receiving 16.7 billion won in bonds from Lee Gyu-dong in December 2000 and was sentenced to five years in prison and fined 15 billion won in May. During the trials, the prosecution revealed that 7.3 billion won of the 16.7 billion won in bonds came from his father’s bank account, and Chun was added to the list of money contributors in the written arraignment along with Lee by the request from the court.

Ji-Seong Jeon verso@donga.com