Fine Recommendation

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Seoul’s Ministry of Government Legislation has expressed the opinion that so-called borrowed name accounts that actually belong to Samsung chairman Lee Kun-hee should be subject to fines as stiff as two trillion won in addition to income tax. Here’s more.

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An independent counsel probe into Samsung Group in 2008 uncovered a total of 1,197 borrowed-name accounts held by Chairman Lee Kun-hee worth some 4.4 trillion won. The Financial Services Commission and the National Tax Service imposed 90% taxation on the income and interest accrued from these accounts. But the two agencies were negative against calls to impose further fines. However things have changed since late last year when a state committee on financial administration reform put forth a recommendation advising the imposition of fines. Then the Financial Services Commission requested a clearer interpretation from the Ministry of Government Legislation and the ministry provided the same opinion as the committee. The ministry said that though the accounts have been converted into real name accounts under the real-name financial transaction system, fines should be imposed nonetheless now that it's been found that the funds in the accounts were actually from another person. The Samsung chief's borrowed-named accounts uncovered so far have increased to approximately 15-hundred. Under law, fines against borrowed name accounts amount to 50% of the value of financial assets. This raises the observation that Lee Kun-hee may need to pay about 2 trillion won more. The Financial Services Commission has decided to accept the Ministry of Government Legislation's interpretation, and will form a task force on the issue with related agencies including the tax service. Regarding the move, Samsung has said it's not a matter to be remarked about on the company level.