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Did Lee Yong-Ho`s `Lobby` Work in the Tax Office?

Posted September. 15, 2001 08:18,   


``Property investigations revealed a significant amount. KEP Electronics and share holding company Sejong Investments are in crisis. The best thing to do is to control them through the top ranks.`` (Lee Yong Ho side`s report content)

``The problem can be solved simply by paying the family property tax. He was rightfully charged 100 million 3000 hundred thousand won.`` (Seoul Kumcheon Tax Office)

The Lee Yong-Ho side felt greatly threatened when it was discovered that they had fabricated their accounts. Yet, they ultimately decided that the tax collection authorities were not such a big problem. Hence, affiliate business RGB System owned by Lee Yong-Ho, former G&G (former Sejong Investments) president who was charged 60, 000 million won in property seizure and currently under arrest for stock price fabrication, received only a light punishment after being reported to the Office of National Tax Administration (NTA) in October 1999.

In addition, the Seoul Prosecutors Office released Lee after an emergency arrest in the May of last year. This shows that the two roots of national subsistence – the judiciary and taxation – are being neglected.

Lee Yong-Ho`s internal reports and fund withdrawal records indicate that his claims about ``my lobbying powers . . .`` were not without basis.

▽ Did not the NTA know? = In October 1999, the Seoul Regional NTA Mapo tax office discovered that Lee Yong-Ho`s affiliate business KEP Electronics made up its accounts with fake receipts. Then head of department of KEP Electronics, Mr. L- wrote in the report titled, `Mapo Settlement Measure`, ``The investigations have made significant progress in the case of KEP Electronics, Sejong Investments (currently G&G), and others by tracking down the bank accounts.`` The end of the report stated, ``If a special tax investigation takes place, it will cause serious problems for the parent company KEP Electronics and stock holding company Sejong Investments.``

However, the Kumcheon tax office which received the documents from the Mapo office stated, ``We made the appropriate investigations, decided that the problem would be simply solved with the payment of the surtax, and proceeded with the collection.``

Ultimately, Lee Yong-Ho escaped the crisis because of the lax measures taken by the tax office and he continued to carry out his criminal activities. According to the arrest warrants requested by the Supreme Prosecutors Office restoration department, Lee is also charged with △ 154 hundred million won for fabricating valuables stock prices and △ 218 hundred million won in affiliate business seizure.

▽ The lobbying worked? = Signs that Lee lobbied to block tax investigations frequently appear in the investigation reports exclusively acquired by Donga.

`Measure for Handling Mapo` presents 3 solutions. △ First, the best way to block the expanding investigation is to control the situation through the top ranks,△ Second, Direct contact with the chief, department head, and superintendent of the Mapo tax office, △ Third, In the worst case scenario, to accept a special tax investigation.

According to the Sejong Investments financial records, Lee Yong-Ho`s brother-in-law Mr. Kim withdrew 10, 000, 000 won purportedly for business promotion. The same money was sent to RGB System manager Mr. Hong. Mr. Hong wrote a receipt to Mr. Kim which stated, ``I accept 10, 000, 000 won for satisfactory accomplishments.`` Mr. Hong appeared at the Mapo tax office the next day and was interrogated.

Mr. Hong tried to deny any accusations about `fabrication of records` as Mr. Chung and Mr. Kwok from Mapo tax office interrogated him. However, he stated, ``RGB System never made a profit that differed in amount from the records.`` The records in fact show a different in the profits made by RGB System. He actually ended up admitting that the records were fabricated.

Kim Seung-Ryun srkim@donga.com