Officials from OB Beer and related corporations have been indicted on charges of evading hundreds of billions of won in customs duties by manipulating the importation of malt, the main ingredient in beer.
On June 27, the Tax Crime Investigation Division of the Seoul Northern District Prosecutors' Office (headed by Chief Prosecutor Ahn Kwanghyun) announced that it had indicted 10 individuals, including the CEO and the Vice President of the Purchasing Team at OB Beer, as well as six corporations, on charges of violating the Act on the Aggravated Punishment of Specific Crimes (customs) and the Customs Act.
Previously, on May 20, prosecutors detained and indicted the director of OB Beer's Purchasing Team on charges of violating the Act on the Aggravated Punishment of Specific Crimes (customs), violating the Customs Act, receiving bribes in breach of duty, and embezzlement in the course of duty. The head of a supplier to the beer company was indicted without detention on charges of mediating breach of duty.
They are accused of abusing the Free Trade Agreement (FTA) Tariff Rate Quota (TRQ) system by falsely making it appear that a nominal company was importing the malt that OB Beer was actually importing, thereby obtaining an exemption from 15.7 billion won in customs duties. The TRQ system applies a lower tariff rate to a set quota of certain items that would otherwise be subject to high tariffs. If the quota is exceeded, the tariff rate can rise to as much as 269%, but within the quota, a 0% tariff rate is applied.
OB Beer also evaded an additional 800 million won in customs duties by disguising part of the maritime freight charges, which are included in the customs value, as overland freight charges. In this process, they colluded with a shipping company to understate the maritime freight charges on invoices and had the difference billed as overland freight by a land transport company affiliated with the shipping company.
A prosecution official stated, "We have uncovered the full extent of the crime in which a global food company, under the pretext of cost reduction, evaded customs duties by exploiting the FTA TRQ system?established to protect domestic industries?by employing shell companies set up by retired employees, thereby undermining national finances."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
