The investigation into CJ Group’s alleged illegal financial activities is expanding as evidence emerged that its chief Lee Jay-hyun and his family were involved in overseas tax evasion, slush funds and of holding additional assets held under borrowed names.

Investigators of the Seoul Central District Prosecutors’ Office are said to be focusing on determining whether the group has illicit assets in addition to those revealed in 2008.

In 2008, the group paid 170 billion won ($151 million) in taxes for assets inherited from Samsung Group founder Lee Byung-chul that had been held under borrowed names. 

Since raiding CJ Group’s headquarters on May 21, the investigators have been gathering data from concerned organizations including the Seoul tax office and Korea Exchange to track down irregularities regarding CJ shares.

Lee is suspected of using assets held in hidden overseas accounts to purchase shares of his companies to increase his stakes in CJ Group.

According to reports, the investigators have secured evidence that CJ Group’s special purpose company in Hong Kong borrowed more than 200 billion won from banks to invest in other countries. The Hong Kong-based operation is suspected of siphoning off the profits from the investments.

In addition, more than 100 billion won from CJ Group affiliates is thought to have been directed to the company in Hong Kong.

As the investigation progresses, the prosecutors plan to begin summoning key CJ Group officials including chairman Lee Jay-hyun from early June.

On the top of the list is a former executive of CJ identified by the surname Shin. The 57-year old is thought to have been in charge of Lee’s hidden accounts until 2007, and is suspected of managing the CJ chairman’s slush funds in overseas accounts.

The investigators have also requested cooperation from the authorities of Hong Kong, British Virgin Islands and other countries where the CJ chairman is suspected of holding accounts under borrowed names.

In addition to illegal financial activities, the investigators are reported to have obtained a list of 16 lawmakers who received money from individuals with connections to CJ Group.

Although the donations were under the legal limit of 5 million won from each contributor, suspicions have risen that larger amounts were divided under different names to avoid detection.

By Choi He-suk (cheesuk@heraldcorp.com)