Prosecutors have begun an intensive investigation into Lone Star. The pace is picking up as well, with arrest warrants being issued, property searched, and bank accounts traced. The country is shocked as it watches these massive cases blowing wide open, including also the Kim Jae Rok case and Hyundai's slush funds.
What prosecutors are looking at with Lone Star is tax evasion and hiding money offshore. They are said to have made a lot of progress during their initial investigation, the case first having been begun by the National Tax Service (NTS) and the Financial Supervisory Service (FSS)
Lone Start refuses to pay charges issued by the NTS last year. It is a serious criminal matter, whatever nationalities are involved, if Lone Star is legally avoiding taxes while fighting the government in court. You can see the true nature of speculative capital in an attitude that tries to paint the illegalities as being those of an individual. Profit obtained through investment is legitimate, and so is taxation, which must not be avoided. The legitimacy of taxation and illegal activities are separate issues. The investigation must be thorough and those involved must be thoroughly punished. Meanwhile, people must not get emotional about it and, for example, tell people they are worried about "the national wealth being taken away and overseas." If Korea is to avoid criticism from foreign capital concerns that it opens the front door and fastens the back door, the law must be enforced along the lines of international standards.
At the center of the Lone Star investigation is what took place during the sale of Korea Exchange Bank (KEB) in 2003. The main allegation is that someone deliberately had the bank's BIS ratio lowered so it could be handed over to Lone Star. Civic groups and the National Assembly filed complaints, and the Board of Audit and Inspection (BAI) is engaging in an audit. That is something potentially very explosive but is yet completely separate from the controversy about tax evasion. It would shake the country at its foundations if there was an illegal and dirty deal going on in the course of Lone Starts purchase of KEB. That is why the investigation needs to be cautious but strict.
The Hankyoreh, 1 April 2006.
[Translations by Seoul Selection]
