Select LG Group offices in South Korea have been raided as part of a tax evasion investigation, local authorities said Wednesday. The development marks the latest government push against family-run conglomerates — commonly referred to as chaebols — in the Far Eastern country which started following the election of President Moon Jae-in in mid-2017. Tax authorities in Korea are now probing allegations of LG's capital gains tax evasion estimated to amount to over $9 million, with the possible transgression being conducted during share transfers of one LG affiliate, according to the Office of the Seoul Central District Prosecutor. LG said it will cooperate with the investigators by any means possible.
LG's domestic rival Samsung recently found itself subjected to a similar tax evasion probe estimated to be worth some $7.5 million but there have been no updates on that investigation since its existence was disclosed in February. The South Korean government increased the corporate income tax rate to 25-percent this year, three percentage points up compared to the previous legal framework, thus raising chaebols' tax expenses by hundreds of millions of dollars annually. It's presently unclear when the probe that prompted local authorities to raid some of LG's offices this week will be completed.
Seoul's efforts to crack down on certain practices of chaebols are polarizing the public and even the government's supporters are questioning their efficiency, pointing to how Samsung Group Vice Chairman Jay Y. Lee recently had his five-year prison sentence for bribery suspended after a lengthy legal battle as an example of the system not working as intended. Mr. Lee remains adamant the charges against him were false and that he had no knowledge of any bribery attempts condoned by the now-dismantled Future Strategy Office of the country's largest conglomerate. The case led to the impeachment of former Korean President Park Geun-hye who was found guilty of corruption and handed a 24-year prison sentence last month, having left her detention center earlier this week for medical treatment.