CJ Group Chairman Lee Jay-hyun Under Fire for Alleged Tax Evasion

South Korean prosecutors are questioning the country’s 10th-richest man for embezzling millions of dollars of corporate funds.

SEOUL -- South Korean prosecutors said Wednesday that they were seeking an arrest warrant for the chairman of CJ Group, the entertainment and food conglomerate that runs the country’s top film company CJ E&M (aka. CJ Entertainment).

Lee Jae-hyun, the eldest grandson of Samsung Group founder Lee Byung-chull and known to be the 10th-richest man in the country, is under fire for alleged tax evasion and the creation of a slush fund.

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According to local reports, the 53-year-old hid funds in accounts opened under “borrowed names” at foreign banks including leading Swiss lender UBS.

Lee returned home earlier Wednesday after being questioned on suspicions that he dodged some 51 billion to 70 billion won ($44.4 million-$61 million) in taxes and embezzling 100 billion won ($87 million) in company money. He is also accused of committing a breach of in a 35 billion-won ($30.5 million) purchase of two buildings in Tokyo.

The top executives of CJ Group are also suspected of purchasing up to 300 artworks by the likes of Andy Warhol and Jeff Koons since 2005 with corporate funds in order to evade taxes.

As a result of the CJ investigation, local lawmakers are seeking to revise the Real Name Financial Services Law, which allows people to open baking accounts under borrowed names if both parties agree to it.

Lee is credited with building CJ, which separated from Samsung in 1997, into Korea’s largest food processor that has since moved into entertainment and pharmaceuticals. The group generated revenue of $25 billion last year and CJ E&M turned in $1.3 billion in revenue.

Lee’s sister, Lee Mi-Kyung (aka Miky Lee) heads the unit, which will release its first big-budget sci-fi epic, Snowpiercer, in the summer. It also secured the largest single-movie investment from China for the upcoming sci-fi fantasy The Fist (working title).