Samsung Group Chairman Lee Kun-hee opened most borrowed-name accounts for his secret funds worth more than 4 trillion won ($3.56 billion) with Samsung Securities Co., the group’s key brokerage unit, and Woori Bank, a lawmaker from the Democratic Party said on Monday, citing the results of a special prosecutor’s probes into South Korea’s largest conglomerate in 2008.

Representative Park Chan-dae, also a member of the National Assembly’s National Policy Committee, said the Financial Supervisory Service (FSS) looked into 1,021 of Lee’s apparent 1,199 borrowed-name accounts confirmed a special counsel investigation in 2008, and uncovered that 64 were bank accounts and 957 were securities accounts. According to the FSS document, 83 percent of the bank accounts, or 53 accounts, were set up with Woori Bank and 79 percent of the securities accounts with Samsung Securities.

Park’s latest revelation is shedding fresh spotlight on the 2008 investigation in which Lee was convicted on charges of tax evasion and breach of trust and later stepped down as group head. Lee returned to his management position two years later in 2010.

During the special investigation into Samsung Group in 2008, the parliament-approved investigation counsel said that about 4.54 trillion won ($4.04 billion) worth of financial assets owned by Lee were held in 1,199 borrowed-name accounts under 486 different names of former and current Samsung employees. FSS document showed that of the total financial assets, 4.4 trillion won worth assets including shares and deposits in those borrowed-name accounts were later taken out by Chairman Lee.

The latest findings by the FSS suggested that Lee’s shares of Samsung Life Insurance Co. and Samsung Electronics Co. might have been deposited in borrowed-name accounts set up with Samsung Securities, said Representative Park.

These borrowed-name accounts could be opened without the process of real-name identity check and whose registration names were different from the names of actual owners before the introduction of the Real Name Financial Transactions Act in the country. Under the Real Name Financial Transactions Act, assets in borrowed-name accounts are now subject to a 90 percent tax on any interest or dividend income. Those assets held in borrowed name accounts that were opened before the enactment of the Real Name Financial Transactions Act can be slapped with a penalty of 50 percent of asset value estimated on the first day when the act took effect.

Recently, Park Yong-jin, another Democratic Party lawmaker, also raised allegations that Lee avoided paying either missing taxes or penalty for his financial assets held under borrowed names when he collected all the money from the accounts.

In 2008, Samsung Group made a public apology for the massive hidden funds under the borrowed-name accounts and announced that it would switch the borrowed-name accounts unearthed by the special investigation team into real-name accounts and pay unpaid taxes. But the conglomerate closed down the accounts without real name registration and did not pay taxes or penalty on the money after it withdrew it, Park claimed. He accused raised the possibility that Chairman Lee could have taken out 4.4 trillion won worth of financial assets under borrowed name accounts with Samsung Securities and Woori Bank behind the doors.

In response to such allegations, the Financial Services Commission (FSC) would review the latest claims and consider seeking to levy a 90 percent tax on interest or income from transactions of Lee’s borrowed financial assets. FSC Chairman Choi Jong-ku told lawmakers on Monday that the financial regulator will work with the FSS to review overall process of how Lee’s borrowed-name accounts were terminated and the money in them were taken out.

National Tax Service Commissioner Han Seung-hee also said the agency will look into the related issue.

By Chung Seok-hwan and Lee Eun-joo

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