Lee, a salaried worker in her 30s, bought tens of millions of won worth of shares in a domestically listed machinery and equipment maker, Company A, and lost the money. Lee bought the stock on news that the company would enter the green energy business, but it turned out the disclosure was false. The share price fell to one-third of the purchase price, and the company was delisted.
A National Tax Service probe found that Company A had no intention of entering a new business. It also found that tens of billions of won in company funds that Company A grants to a paper company (a company in name only) for promoting the new business flowed back to the owner. The owner was found to have used the embezzled tens of billions of won to pay the deposit for an expensive apartment lease and to buy a golf membership.
After an eight-month tax audit, the National Tax Service said on the 5th that it uncovered 615.5 billion won in tax evasion linked to 27 corporations and related parties involved in unfair practices in the stock market. The National Tax Service collected 257.6 billion won from them and referred 30 cases to prosecutors. The probe followed President Lee Jae-myung's visit to the Korea Exchange (KRX) in Jun. last year, where Lee said, "We will make it clear that if you play games in the stock market, you will be ruined."
The unfair practices in the stock market uncovered in this probe fall into three categories: ▲ self-dealing by controlling shareholders ▲ stock-price manipulation by corporate raiders ▲ false disclosures. Of the 27 corporations caught, 20 were listed on the KOSDAQ market and four were listed on the KOSPI market, according to reports.
The National Tax Service cracked down on controlling shareholders' self-dealing and collected a total of 122 billion won. Listed auto parts maker Company B was found to have had its owner direct executives and employees to sell shares of an unlisted affiliate on a transaction platform at one-third of the market price. The purpose was to gift equity in the affiliate to the owner's child at a low price.
The National Tax Service also collected 41 billion won over stock-price manipulation involving a corporate raider. C, a corporate raider and private lender, acquired metal panel maker Company D under a borrowed name and gained tens of billions of won through market rigging. In the process, the share price plunged more than 60%, hurting small shareholders. In addition, the National Tax Service collected 94.6 billion won over false disclosures.