A stock manipulation criminal, who inflated the stock price by buying a small amount of shares in an electric vehicle parts company and promoting it as if he were pursuing a company acquisition, has come under investigation by the National Tax Service.
According to the National Tax Service on the 29th, a price manipulator identified as Gap inflated the stock prices of Company A and Company B through false promotion that he would acquire publicly listed Company B in the electric vehicle parts sector via Company A, where he is a major shareholder. However, Company A only bought a 5% equity stake in Company B and had no genuine intention to acquire.
After Company A saw Company B's stock price rise more than threefold, it sold all its holdings on the market. Gap also sold some of Company A's stocks, earning hundreds of millions of won in capital gains. The stock price of Company B, which had risen on expectations for new business, halved, and minority shareholders had to incur losses.
The National Tax Service plans to thoroughly investigate Gap and Company A for the omission of capital gains income reporting and to recover related taxes.
Cases have also been identified by the National Tax Service in which corporate raiders used borrowed names to acquire publicly listed companies, and obtained large loans against valuable assets as collateral for personal gain, shifting the financial burden onto the corporations.
The National Tax Service announced on the 29th that it will conduct tax investigations against unfair actors who have illegally profited while failing to pay their fair share of taxes by disrupting the stock market. The targets of this investigation include 27 individuals (including corporations) who have infringed on minority shareholders' interests, such as corporations that made false disclosures for stock price manipulation and those specialized in 'eating and running'.
The first group under investigation consists of stock manipulation forces who inflated stock prices through 'false disclosures' and then sold shares in bulk to reap enormous capital gains. According to the National Tax Service, they falsely disclosed entering lucrative businesses like drug development and secondary batteries or signing large-order contracts to inflate stock prices, resulting in massive trading gains. The stock prices of the companies involved skyrocketed by about 400% on average within 64 days after the false disclosures, then plummeted. Minority shareholders who invested based on these false disclosures were left with irrecoverable losses, explained Director General Min of the National Tax Service.
The second group under investigation is corporate raiders who used borrowed money to acquire sound corporations and embezzled assets, leaving the corporations as mere shells. They borrowed or sold off the assets of the acquired company as collateral and funneled funds under various investment pretenses, effectively transforming the acquired company into an 'empty firm'.
The company left as a shell either manipulated its accounting records to disguise embezzlement as legitimate transactions, leading to delisting, or went bankrupt as its financial condition worsened and it was unable to repay its debts.
These corporate raiders used others' names to acquire companies to evade investigation by law enforcement. Even after being punished, they have returned to seek new prey. Director General Min pointed out that 'corporate raiders disguised embezzled company funds as payments for management consulting services to evade taxes,' adding that they lived lavishly by purchasing expensive imported cars and luxury goods, and enjoying 5-star hotels and golf courses as company expenses.
Major shareholders of publicly listed companies who exploited their dominant positions, treating listed firms as 'their own,' and violated the rights of minority shareholders are also on the investigation list. These unscrupulous major shareholders violated stock market-related regulations by using insider information for personal gain and infringing on the rights of minority shareholders. They also transferred assets to their children tax-free through unfair mergers and tricks like business favoritism for the sake of management succession.
Director General Min stated, 'There have been instances where the value of shares owned by a child's corporation was inflated beyond actual value, and based on this, the management rights were transferred at a bargain price in exchange for shares of the father's controlling company,' adding, 'It has been analyzed that the subjects of this investigation had reported about 92% of the value of gifted property inaccurately to evade taxes.'
The National Tax Service plans to rigorously verify individuals suspected of tax evasion linked to unfair trading practices that unfairly profited.
A representative from the National Tax Service noted, 'If there is a concern that the subject of the investigation may intentionally dispose of assets, we will initiate seizures (provisional seizure before final issue) even before imposing taxes to prevent the loss of tax claims,' and emphasized that in cases of tax evasion or fraudulent issuance of tax invoices, they will report it to enforcement authorities for appropriate punishment.