[Panama-Based Law Firm's Document of Tax Havens] Roh Jae-heon Established Paper Companies During Divorce Trial: Was He Trying to Hide Roh Tae-woo's Slush Funds?

[경향신문] The British Virgin Islands where Roh Jae-heon, the eldest son of former President Roh Tae-woo, established three paper companies, is also where Chun Jae-guk, the eldest son of former President Chun Doo-hwan established his paper company.

Similar actions taken at the same place have amplified allegations that the "presidents' children" are taking advantage of the islands as a tax haven to conceal slush funds.

According to News Tapa, which analyzed the documents leaked from Mossack Fonseca, Panama's largest law firm, along with the International Consortium of Investigative Journalists (ICIJ) on April 4, Roh established three companies in the British Virgin Islands on May 18, 2012 and stated himself as a shareholder and a director of the companies. All three companies only issued one $1.00 stock each, and their addresses were the Virgin Islands branch of Mossack Fonseca, the address of thousands of companies-the three companies were a typical paper company.

Kim Yong-jin (right), head of News Tapa and journalist Sim In-bo release the first results of a joint project between News Tapa and the International Consortium of Investigative Journalists with a picture of former President Roh Tae-woo\'s family in the background on April 4. / Yi Seok-wu

Paper companies in tax havens are often used to receive profits in that name or to evade taxes and transfer property overseas.

In particular, according to the ownership structure of the three companies Roh established, one company is listed as the shareholder of another company. Such multiple-layered ownership hints at traces of an attempt to avoid tracking.

Experts also point out that the establishment of the paper companies and Roh's resignation as director was carried out at critical moments. News Tapa raised further allegations stating, “At the time Roh established the paper companies, he was in a divorce trial concerning the division of property. Since there was much interest in whether the size of former President Roh's slush funds would be disclosed during the trial, his son may have tried to conceal the remaining funds."

News Tapa also claimed that Roh established the paper companies through an agency in Hong Kong when he was the CEO of the Hong Kong affiliate of Incross, an IT firm suspected of being an SK affiliate disguised under special relations. Thus the media outlet stated that a connection with Chey Tae-won, chairman of SK Group and also Roh's brother-in-law, could not be excluded.

Roh simultaneously resigned as director of the three companies on May 24, 2013, three days after a press report first disclosed that 245 South Koreans including Chun Jae-guk had established paper companies in tax havens.

That August, three months after Roh resigned as director, former President Roh's younger brother Roh Jae-woo and in-law Shin Myung-soo, former chairman of Shindongbang Group, coughed up 15 billion won and 8 billion won respectively, thus completing the payment of the former president's remaining 23 billion won fine. News Tapa pointed out, “It does not make sense to think that Roh gave his younger brother and in-law billions of won in slush funds while not giving a single penny to his son. If Roh Jae-heon intended to conceal his father's slush funds through the paper companies in the tax haven, he succeeded.”

A representative of Roh said, “He established the paper companies as a common process in doing business in China, but business did not make any progress, so he did not even open an account. We are ready to provide an explanation if the related authorities deem it necessary, and this issue has absolutely nothing to do with evading taxes or hiding slush funds.” News Tapa is going through the documents and analyzing the ones related to South Korea. They announced that they were currently checking the identities of 195 people, in addition to Roh, with South Korean addresses whom they believe to be South Koreans. News Tapa stated, “So far we have confirmed the identities of dozens of South Koreans and we will gradually release the list when we believe a public report is necessary, such as when it involves businessmen.”