SK, ex-tax official under probe over suspected kickbacks


New light was shed on the problematic practice of former civil servants’ perks on the discovery that an ex-executive at the National Tax Service received sizeable paychecks from local companies.

Lee Hee-wan, formerly head of the tax office’s investigative unit is suspected of receiving 3 billion won ($2.7 million) from SK Group’s affiliates for his tax accounting services between 2006 and last year.

The prosecution suspects that the money was a post-retirement payoff from the company to thank Lee for watching its back as Lee had previously headed tax probes into SK Group when he was at the NTS.

Lee also collected fees from ChungHo Nais, a local appliance company, starting in 2006 for tax-related advisory services. The prosecution suspects there may be more companies that paid Lee for similar services.

Sources from the prosecution said Lee may have shared the profit with incumbent tax office executives to lobby in lieu of the companies that paid him.

One employee at a company questioned by the prosecution reportedly said the money was not only a fee, but a way of asking Lee to help them out during and after government tax probes

Lee is currently in police custody following his arrest on June 15 on a different charge of taking 300 million won from KimYoung Co., an academy specializing in college transfers, for tax favors.

SK Group on Sunday told The Korea Herald the money paid to Lee was “legal.”

“It was a legal business transaction with the documents to prove it,” said one SK Group spokesperson. “Some of our bigger affiliates paid out the amount to the firm Lee headed for tax-related services.”

The prosecution is currently said to be reviewing the accounts held by Lee and questioning the former tax office executive on whether he received the money as kickbacks.

The corporate custom of “showing respect” for former government officials ― mostly those who held influential positions ― is not uncommon.

Many an official has nabbed high-paying jobs at local corporations in return for offering his or her “expertise.”

The practice itself is not illegal, but in many cases it involves unlawful lobbying and prompts malpractice by former officials who are exceedingly knowledgeable on the regulatory system.

The recent scandal over Busan Savings Bank, for instance, involved former employees at the Financial Supervisory Service who worked as auditors at the bank’s affiliated institutions. They were found guilty of extending illegal loans and window-dressing the accounting books for the savings bank.

As officials need to find new jobs after they retire from government positions, in many cases they tend to grow lax toward the companies or institutions they are monitoring as they near retirement, critics say.

Recent figures provided by a Grand National Party lawmaker showed that more than 40 percent of retired Ministry of Knowledge Economy officials took on new jobs in the corporate sector of state-run companies under the ministry’s wing within a month of their departure.

Critics, however, believe it would be difficult for the prosecution to hold Lee accountable for payments in relation to his connections in the corporate sector as the kickbacks are disguised as lawful compensation.

As a case in point, the prosecution was previously unable to indict former NTS chief Han Sang-ryule even after discovering he had received hefty paychecks from conglomerates like SK Telecom and Hyundai Motor as advisory fees.

By Kim Ji-hyun (jemmie@heraldcorp.com)