Posted on 04/14/2005 11:39:59 AM PDT by TigerLikesRooster
Taxman probes foreign funds invested here
|
|
|
|
|
April 15, 2005 ¤Ñ Korean tax authorities are investigating foreign funds, including U.S.-based Lone Star Funds and Carlyle Group, sources said yesterday.
"I will neither confirm nor deny," Han Sang-yool, chief of the National Tax Service's investigative division, said yesterday. But he added, "It is the National Tax Service's duty and responsibility to examine whether international capital, as well as domestic capital, has made unfair profits through irregularities." The investigation follows growing public suspicion about foreign stock investors, and increasing concerns in Korea that foreign capital is making huge tax-free profits by investing in local companies through subsidiaries in tax havens. According to sources, 10 officials from the National Tax Service visited the Seoul office of Lone Star between Tuesday and Wednesday, and seized documents and computers. On Tuesday, Lee Ju-sung, head of the National Tax Service said during a briefing, "We will apply the same standards to domestic and foreign capital in tax probes."
Lone Star and Carlyle declined to confirm the tax probes. Staff at other foreign funds that may be under investigation, including the U.S.-based Newbridge Capital and the Government of Singapore Investment Corp., also declined to comment. Lone Star is now the biggest shareholder in Korea Exchange Bank with a 51-percent stake.
The Texas-based private equity fund took a controlling stake for $1.2 billion in 2003. Late last year, the fund sold the Star Tower building in southern Seoul to Singapore's GIC Real Estate Pte, reportedly for more than 900 billion won, making more than 250 billion won in tax-free profits.
Carlyle Group gained a profit of about 700 billion won from its sale of KorAm Bank to U.S.-based Citigroup last year. The private equity fund did not pay tax on the profits in Korea, as the deal was made through its subsidiary in Labuan, Malaysia, which has a double-taxation pact with Korea.
"We wonder what the government wants to reveal through the tax probe, as all our deals in Korea have been made after close examination of related laws," a foreign fund official said.
by Moon So-young, Kim Dong-ho <symoon@joongang.co.kr> |
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.