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March 29, 2024

Brokerages penalized for Samsung chief’s borrowed-name accounts

PUBLISHED : March 19, 2018 - 16:34

UPDATED : March 19, 2018 - 16:35

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[THE INVESTOR] The National Tax Service has slapped fines of up 104 billion won (US$96.7o million) on brokerages at which Samsung Electronics Chairman Lee Kun-hee opened borrowed-name accounts, according to news reports on March 19.

The brokerages, including Samsung Securities, have paid some part of these punitive taxes, according to local newspaper Hankyoreh, which first reported on how the securities firms played a role in helping Lee hold accounts under borrowed names. 




“The firms paid some of the fines imposed in February,” an NTS official was quoted as saying. The tax agency could not be reached for further comments.

The Korean tax code stipulates that interest and dividend income from borrowed-name accounts are subject to a 90 percent penalty. The stock traders, who have the right to indemnity, are reportedly planning to request the tech giant to reimburse the money.

“We have nothing to say on the issue, but we will continue to abide by the rules,” said a spokesperson from the tech giant.

The Financial Supervisory Service announced on March 5 that it found 27 Lee’s accounts under different names, which were valued at around 6.2 billion won as of Aug. 12, 1993, when Korea implemented a system enforcing real-name accounts. Most of the funds were held in the form of equities at four Korean brokerages -- Shinhan Investment, Korea Investment & Securities, MiraeAsset Daewoo Securities and Samsung Securities.

Some critics suspect there could be more borrowed-name accounts to hide slush funds worth an estimated 5 trillion won, but the authorities have yet to unearth related evidence.

By Kim Young-won (wone0102@heraldcorp.com)

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