The prosecution on Wednesday sought an arrest warrant against CJ chairman Lee Jay-hyun on charges of embezzlement and tax evasion. Lee, the nephew of Samsung chairman Lee Kun-hee, could face up to nine years in prison if found guilty.

Seoul Central District Court said it will review the request on Monday.

Lee has long been accused of being involved in illegal activities through the group’s subsidiaries and executives.

Lee reportedly admitted that he had ordered executives to create illegal funds. But he claimed that the funds were not created for personal use, sources said.

The 53-year-old tycoon was grilled by the prosecution on Tuesday over allegations that he amassed massive secret funds in and out of the country for personal use and evaded tax in the process of illegal activities.

The food and entertainment giant has been under intensive investigation since May for allegedly hoarding secret funds at home and abroad using borrowed-name accounts, ghost companies and fraudulent accounting. The prosecution believes that the alleged illegal activities were led by the chairman and his family. Lee is also suspected of evading 51 billion won ($44 million) in taxes and embezzling 60 billion won in company funds.

Additionally, he is accused of misappropriating another 35 billion won in company funds to buy two buildings in Tokyo and raising millions of dollars in slush funds by purchasing artworks under borrowed names. He is also suspected of hiding massive funds in overseas accounts and illegally purchasing shares of his companies by disguising himself as a foreign investor. Lee allegedly gained profits worth more than 5 billion won through the alleged stock manipulation, according to reports.

But the prosecution did not seek warrants on these additional charges involving stock manipulation, hiding illegal assets overseas and creation of slush funds. The prosecution plans to expand probes into the additional allegations and press charges later.


By Cho Chung-un
(christory@heraldcorp.com)