The chairman of South Korean pharmaceutical giant Dong-A Socio Holdings has been detained on charges of tax evasion and offering illegal kickbacks to local doctors as bribes for prescribing the firm’s drugs.

The Busan District Court late Monday issued an arrest warrant for Dong-A Socio Holdings Chairman Kang Jung-seok, who the prosecution has charged with embezzlement, breach of medical law and tax evasion.

Kang is alleged to have embezzled around 70 billion won ($62.67 million) in total of the company’s funds from 2005, of which around 5.5 billion won was used to offer illegal kickbacks -- also known as “rebates” here -- to doctors in return for prescribing its drugs.

The Dong-A chairman also faces charges of evading around 17 billion won in taxes from 2007 to 2011 by manipulating financial records, according to the prosecution.

Kang has reportedly denied all of the charges, saying that the wrongdoings were committed independently by the company’s sales employees or third-party retailers.

Dong-A Socio Holdings released a statement Tuesday saying that “the court’s decision to detain (the chairman) does not yet determine (his) guilt under the law” and that it will “do its best to clarify the allegations in subsequent trials.”

The company also stressed that despite the chairman’s absence, its executives including the CEO will work to minimize any hurdles to core decision-making related to large-scale investments and new business development.

Dong-A Socio Holdings is the parent company that oversees affiliates including Dong-A ST, Dong-A Pharmaceutical, ST Pharm, DM Bio and Dong-A Otsuka.

Kang Jung-seong, 53, is the grandson of the late founder of Dong-A Pharmaceutical Kang Joong-hee and the fourth son of Dong-A Socio Holdings’ honorary Chairman Kang Shin-ho, who retired from management earlier this year.

Dong-A Socio Holdings shares closed at 125,000 won Tuesday, down 1.57 percent from the previous trading day.

By Sohn Ji-young (jys@heraldcorp.com)