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Kolon Group Chairman Lee Accused of Tax Evasion
Ahead of Good Thing
Kolon Group Chairman Lee Accused of Tax Evasion
  • By Michael Herh
  • June 16, 2017, 03:30
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Kolon Group chairman Lee Woong-yeul.
Kolon Group chairman Lee Woong-yeul.

 

A lot of attention is being paid to the news that the National Tax Service recently asked the prosecution to look into Kolon Group chairman Lee Woong-yeul prior to the launch of the world's first cell gene therapy product “Invossa” developed by Kolon Life Science.

According to industry sources, earlier the National Tax Service (NTX) sent a large number of taxmen from the fourth investigation bureau of the Seoul Regional Tax Office to Kolon, the holding company of the Kolon Group, and Kolon Industries, the group’s flagship company, and launched a tax probe of the group in mid-April last year.

The special tax investigation was originally scheduled to be completed by the end of June. But as the probe was extended for three months until September, the investigation was turned into targeting a violation of tax law on the premise of asking the prosecution to investigate the case (a violation of the Tax Dodger Punishment Act).

In general, an investigation into a violation of tax law is a tax probe that is conducted when an apparent tax evasion allegation was clearly uncovered unlike a general tax investigation (including a special tax investigation). This kind of investigation deals with double ledgers, the falsification or alteration of documents and fake contracts among others.

This is the reason why it is said that the fourth investigation bureau’s participation in the case and the change of the investigation targeting a violation of tax law suggest that the NTX found the Kolon Group leadership’s misconduct or wrongdoings. The fourth investigation bureau is known to have the astutest taxmen at the Seoul Regional Tax Office.

It is also said in the business world that it cannot be ruled out that investigators may uncover allegations on window dressing accounting and slush fund creation as chairman Lee was accused of tax evasion by the prosecution.

Kolon is seizing an opportunity to take a meaningful step forward through the new drug “Invossa.” However, concerns about owner risk are growing as it became more likely that the aftermaths of the tax probe will hit chairman Lee hard.