Disclosure of South Korean offshore secrecy raises demand for tax investigation

The first release of South Korean names in offshore records obtained by the International Consortium of Investigative Journalists (ICIJ) has prompted the country’s ruling and opposition parties to urge tax authorities to undertake a thorough investigation into South Koreans’ activities in tax havens.

The Korea Center for Investigative Journalism (KCIJ), the sole South Korean partner of the ICIJ and which produces an investigative online website called Newstapa, reported Wednesday how family members of business leaders are linked to secrecy-shielded companies and accounts in offshore jurisdictions.

The names were revealed at a packed press conference in Seoul amid high public interest. And soon, the story was splashed in headlines across the country.

Those identified include Lee Soo-young, who chairs chemical giant OCI, and his wife; Lee Young-hak, the wife of former Korean Air vice chairman Cho Choong-kun; and Cho Wook-rae, the youngest brother of Hyosung Group Chairman Cho Suk-rai.

In the wake of the disclosure, OCI issued a statement admitting that its chairman Lee had one million U.S. dollars in a bank account related to a shell company in the British Virgin Islands between 2006 and 2008 and closed it in 2010. The statement added that the company will immediately resolve unpaid taxes if there are any.

South Korea’s ruling Saenuri Party and the main opposition Democratic Party called on tax authorities to launch a probe into the findings from the offshore reporting collaboration and to take action if tax evasion or other illegal activities were found.

“Wednesday’s disclosure was believed to be just a tip of the iceberg,” said Park Yong-jin, a spokesman for the Democratic Party, calling for a strict investigation into ethics lapses in the business industry and alleged illegal activities.

The revelation comes amid government efforts to tackle the issue of tax avoidance, with the tax agency vowing a fight against those who stash money offshore beyond the reach of tax authorities.

After the first release of offshore stories in South Korea, Kim Duk-joong, the head of the National Tax Service, said that one of the top priorities for the tax agency this year is to crack down on offshore tax evasion.

Yoojung Lee is a reporter with the Korean Center for Investigative Journalism

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