Chaebol head nabbed for corruption
THE head of the CJ Group, a large conglomerate in South Korea, was arrested on charges of embezzlement and tax evasion as the country's Parliament on Tuesday enacted a series of laws aimed at protecting smaller businesses from the corporations that have dominated the economy for decades.
Mr Lee Jay Hyun, the CJ Group chairman, was locked up shortly before midnight on Monday, accused of stashing hundreds of millions of dollars under other people's names, dodging 70 billion won (S$78 million) in taxes and misappropriating 100 billion won in company money.
Mr Lee, 53, a grandson of Mr Lee Byung Chull, the founder of the Samsung empire, was the first tycoon to be arrested on corruption charges since President Park Geun Hye took office in February amid mounting public calls for "economic democratisation".
Amid widespread discontent over the widening gap between the rich and the poor, South Koreans have fumed at the way the tycoons helped their children inherit easy fortunes.
Companies sold shares to the chairmen's children at unrealistically low prices or showered lucrative business orders on affiliates owned by the chairmen or their families without conducting competitive bidding.
By trying to curb the power of chaebols, Ms Park is struggling with her father's legacy.
Her father, Mr Park Chung Hee, who ruled South Korea from 1961 to 1979 as it moved from a desperately poor country towards becoming an economic power, nurtured a handful of family-controlled businesses with easy credit, subsidies, tax benefits and protection from foreign competitors.
Those companies, including Samsung and Hyundai, have grown into globally-recognised conglomerates that have been credited with leading South Korea's economic growth.
Prosecutors said Mr Lee Jay Hyun was a case in point of chaebol excesses. On Tuesday, they summoned him from his cell for questioning. They were reportedly investigating the details of what they suspected was secret hoarding of funds and whether he used that money to manipulate stock prices of CJ subsidiaries.
Prosecutors said they had found hundreds of millions of dollars Mr Lee kept in bank accounts opened under the names of acquaintances and were investigating whether the money was cash he had inherited from his father and had hidden from the tax authorities or embezzled from his companies, the South Korean media reported, citing prosecution sources.
"I am sorry for causing trouble for the people," Mr Lee said on Monday night, shortly before he was taken to jail.