South Korean prosecutors' raid is about alleged tax evasion, but also signals more reforms of role played by controlling families.
Life is not so good for LG as South Korean prosecutors raid the group’s head office as part of a probe into alleged tax evasion by family members controlling the conglomerate.
In a text message sent to reporters by prosecutors, the Seoul Central District Prosecutors’ Office stated they are looking into possible evasion of capital gains tax worth about 10 billion won ($9.25 million) in relation to the transfer of shares of an LG affiliate. Prosecuters secured tax and accounting documents and related computer files needed for the investigation, the prosecuters in charge of the operation said. An official statement from LG Corp confirmed the relevant parties will cooperate with the prosecutors’ probe, which they had expected.
The probe centres on differing views concerning the amount of tax payable after some shareholders sold shares in the market and paid the corresponding taxes, according to LG. This probe into LG, the country’s fourth-biggest conglomerate by assets, is the latest faced by families controlling the country’s conglomerates, known as chaebols. The liberal government of Moon Jae-in has pledged to pursue chaebol reform, urging them to improve governance structures to improve transparency and fair competition.