The nation’s financial watchdog launched a probe into suspected illegal foreign exchange dealings by owners of paper companies established in overseas tax havens, officials said Tuesday.

The Financial Supervisory Service said that the investigation was targeting 184 people who were disclosed by a news organization as holders of paper companies in tax havens abroad such as Virgin Islands.

The investigation is the largest in scale of the financial watchdog’s probe into the alleged foreign exchange law violators.

The FSS noted that the suspects, who have transaction histories with tax havens overseas, are likely to have slipped under the proper registration process to evade financial authorities’ watch.

“Setting up and operating paper companies overseas involves a number of financial transactions, some of which could have gone unnoticed,” an FSS official said.

The FSS said that the investigation had made some progress as some of the suspects have confessed to violations.

The list of suspects includes big-name figures, such as Chun Jae-kook, the eldest son of former President Chun Doo-hwan. The FSS has asked the junior Chun for documents to certify certain transaction history.

In 2004, the junior Chun allegedly set up a ghost company called “Blue Adonis” in a tax haven, and allegedly used it to open an account at Arab Bank’s Singaporean branch.

The investigation seized public attention in particular because his father, former President Chun, refused to pay about 75 percent of state penalties, citing poverty. But as his son Jae-kook was exposed by media to have set up a ghost company in the British Virgin Islands a popular tax haven prosecution has been looking for hidden wealth held by the former.

OCI chairman Lee Soo-young, Hanjin Shipping Holdings Co. chairwoman Choi Eun-young and former chief executive of the now-defunct Joongang Mutual Savings Bank Kim Seok-ki appeared on the list as well.

The OCI chairman in May admitted that he and his wife held accounts of a paper company set up in the Virgin Islands.

The FSS’s original plan was to investigate only 20 suspects, but it later expanded the list to 184, largely due to the disclosure of hundreds of names engaged in the tax haven controversy. The names were announced by a group of local investigative journalists.

The FSS is not alone in investigating the controversy, as the prosecutors on the same day executed a seizure-and-search warrant for former President Chun’s residence.

Moreover, the National Tax Service is set to reopen its probe into the penalty default by former President Chun.

By Chung Joo-won (joowonc@heraldcorp.com)