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Hyundai Development chief accused of tax evasion, embezzlement

By Song Sangho

Published : June 15, 2011 - 19:06

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Four executives of Hyundai Development Co. including its chairman Chung Mong-gyu were accused last Friday by a local housing developer on charges of tax evasion, breach of trust and embezzlement, prosecution sources said Wednesday.

The chief of the housing developer in charge of the sale of the I-Park apartment units built in Ulsan by the Hyundai construction unit filed the accusation with the prosecution in Seoul.
Hyundai Development Co. chairman Chung Mong-gyu Hyundai Development Co. chairman Chung Mong-gyu

The chief surnamed Lee claims that HDC evaded value-added taxes worth 1.2 billion won ($1.1 million) by disguising the balcony expansion cost as part of apartment prices.

He said in the accusation that the expansion cost was to be separately dealt with under the bilateral agreement.

Lee also claims that HDC evaded acquisition and registration taxes worth around 16 billion won through inappropriate methods in the process of disposing of unsold apartment units.

HDC misappropriated 112.8 billion won from the fund that the two firms agreed to jointly manage for the I-Park construction project, Lee said.

Pointing to alleged wrongdoings by the major builder, he assumed that the scale of tax evasions by HDC may be far larger should it be confirmed to have used the same business methods in other I-Park construction projects in Incheon, Gwangju, Jeonju and Gunsan.

HDC officials said that they “legitimately” carried out their businesses concerning the construction of the apartments in question in the southeastern port city and that they are verifying the accusations.

After checking fundamental facts regarding the accusations, the investigators at the Seoul Central District Prosecutors’ Office plan to summon Lee and HDC officials soon for questioning.

By Song Sang-ho (sshluck@heraldcorp.com)