'Tax Evasion Charges' Chairman Koo Bon-neung of 범LG Family and Others Acquitted

Koo Bon-neung, Chairman of Heesung Group Photo by Yonhap News

[Asia Economy Reporter Kim Daehyun] The Supreme Court has confirmed the acquittal of Koo Bon-neung, chairman of Heesung Group, and other members of the pro-LG family and executives who were prosecuted for failing to pay capital gains tax amounting to around 15 billion KRW.

On the 13th, the Supreme Court's 2nd Division (Presiding Justice Cho Jae-yeon) announced that it upheld the lower court's verdict of not guilty in the appeal trial of 14 family members including Chairman Koo, who were indicted for violating the Punishment of Tax Offenses Act, and two former and current finance management team leaders, including Mr. A, who were indicted for violating the Act on the Aggravated Punishment of Specific Crimes (tax-related).

Koo, the younger brother of the late Koo Bon-moo, former chairman of LG Group, and his family were prosecuted for failing to pay capital gains tax amounting to around 15 billion KRW during the transfer of affiliate company stocks from 2007 to 2017. The prosecution believed that Mr. A and others directly executed the tax evasion of the family’s capital gains tax, and held Chairman Koo and others responsible for inadequate supervision and control.

Earlier, the National Tax Service reported to the prosecution in 2018, suspecting that Chairman Koo and others deliberately evaded taxes during the buying and selling of affiliate company stocks. The prosecution filed a summary indictment requesting fines, but the court transferred the case to a formal trial ex officio. A summary indictment is a procedure where the prosecution requests fines or penalties through written examination instead of a formal trial. If the parties or the court raise objections, the case is transferred to a formal trial.

However, both the first and second trials acquitted the defendants. The first trial court stated, "The defendants were only interested in the transaction amount and quantity during the stock trading process and did not attempt to prevent third-party involvement," adding, "Due to the nature of competitive trading in the stock market, it was impossible to prevent such involvement."

It further added, "There is no evidence of closed transactions, price determination based on special relationships, or distribution of economic benefits." The second trial also judged, "There is insufficient evidence to prove fraudulent acts," and "It is difficult to see an intention to commit tax evasion."

The Supreme Court agreed with these judgments. The court stated, "The lower courts did not err in interpreting the law regarding 'unfair transaction calculations' under Article 101 of the Income Tax Act, 'fraud or other dishonest acts' under Article 3 of the Punishment of Tax Offenses Act, and the intent of tax evasion," and dismissed the prosecution's appeal.

This content was produced with the assistance of AI translation services.