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Thu 17 Apr 2008 05:03 PM

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Samsung chairman charged with tax evasion and breach of trust

Chairman Lee Kun-hee denies wrongdoing but assumes responsibility for ‘Structural problems’

Samsung chairman Lee Kun-hee and nine other executives have been indicted with tax evasion and breach of trust, with Kun-hee accused of possessing hidden assets totaling 4.5 trillion won ($4.5 billion).

The indictments follow a three-month government probe into Samsung’s operations. The firm has, however, been cleared of the charges that the probe was set up to investigate. These earlier charges involved the existence of a theoretical slush fund totaling 200 billion won ($197 million) used to bribe government officials.

A statement from the official prosecutors said: "It is the hope of our investigation team that this probe would serve as an opportunity for Samsung to shed these problems and be reborn as an undisputed ultra first-class global company."

The ‘breach of trust’ in the new allegations refers to Kun-hee’s role in the illegal transfer of control of Samsung group to Lee Jae-yong, a senior executive of Samsung Electronics and Kun-hee’s son.

So far the special prosecutors involved with the case have confirmed that “convertible bonds were issued at remarkably low prices and illegally allotted."

Lee Kun-hee has accepted responsibility for such ‘structural problems’ and may consider stepping down from his position as chairman.

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