[Asia Economy Reporter Kim Hyung-min] Former CEO Ji Woo-jong of Daemyung General Construction (Daemyung Construction) has been indicted on charges of tax evasion amounting to billions of won and embezzlement and breach of trust amounting to hundreds of billions of won.
The Tax Crime Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Min Kyung-ho) announced on the 5th that former CEO Ji was indicted without detention on charges of tax evasion, embezzlement, and breach of trust. Director A (52) of Daemyung Construction's accounting team, who was involved in Ji's crimes, and Daemyung Construction as a corporation were also indicted.
This case is the first tax crime case in which the prosecution has directly investigated again since the Tax Crime Investigation Division of the Central District Prosecutors' Office was reinstated following the amendment of the 'Regulations on the Organization of the Prosecutor's Office' in July.
According to the prosecution, former CEO Ji is accused of evading a total of 13.7 billion KRW in taxes from 2010 to 2018. It was investigated that he evaded 3.32 billion KRW in corporate tax and 8.48 billion KRW in comprehensive income tax by inflating expenses or hiding income and manipulating Daemyung Construction's accounting books. He is also accused of evading 1.9 billion KRW in gift tax by valuing tens of billions of won worth of unlisted affiliate stocks at zero and then gifting those stocks to his children. The prosecution confirmed that the scale of embezzlement and breach of trust by former CEO Ji from 2007 to 2016 amounted to 41.9 billion KRW.
From February 2014 to February 2015, former CEO Ji is investigated to have used 17.1 billion KRW of company funds, obtained by inflating expenses or hiding income, to support business funds to Housefan, an affiliate company in which his children hold 85% of the shares, or to repay personal debts of the family. Thanks to this support, Housefan achieved sales of about 100 billion KRW in sales projects. Former CEO Ji also concealed company profits and manipulated payments to his personal business as construction costs, causing a loss of 13 billion KRW to the company, and lent 88.1 billion KRW to Housefan without collateral or interest, causing a loss of about 8.3 billion KRW. He also caused a loss of 3.5 billion KRW by selling land owned by Daemyung Construction to his younger sister at a low price.
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