Moneual chief suspected of evading taxes, creating slush fund

SEOUL, Oct. 31 (Yonhap) -- The chief executive of Moneual, a small-sized home appliance manufacturer that abruptly declared bankruptcy earlier this month, was accused Friday of dodging taxes and operating slush funds through a paper company overseas, using the money for personal luxuries.

The Korea Customs Service (KCS) said Park Hong-seok, the founder of the company, is suspected of accumulating some 44.6 billion won (US$421.8 million) in secret funds through a paper company established in Hong Kong.

The money mostly came from bank loans obtained through inflated export receivables, the agency said.

Established in 2004, the company was inducted into the 1 trillion won sales club last year after claiming 110 billion won in operating profit. It was hailed as one of the most successful small firms.

The 52-year-old Korean-American was taken into custody earlier this week on charges of manipulating documents on the value of exports and using them to get more than 3 trillion won in loans from local banks.

He had brought 12 billion won into South Korea through money laundering and used the money for private purposes like gambling, buying a mansion on a resort island and paying credit card bills, according to the KSC.

"Park's scheme is a large-scale fraud show," said a KSC official. "Anybody could have detected the problems in his documents. We can assume that banks had overlooked Park's fraud, or Park had submitted perfectly falsified documents."

The scandal surfaced after Moneual filed for court receivership on Oct. 20.

The Financial Supervisory Service (FSS), the financial oversight body, has been looking into the local lenders' loan screening and credit assessment process to see if they were involved in Park's scam.

brk@yna.co.kr
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