MBK Partners Chairman Byung Ju Kim has been found to have paid W40 billion in taxes and penalties to avoid charges of overseas tax evasion which carries a criminal prosecution in Korea in connection with income not reported in Korea with the sale of ING Life Insurance in 2018. This follows a lengthy and unprecedented two-year investigation by the Korea National Tax Service following an unannounced raid of MBK’s Seoul office (US$1=W1,371).
MBK Partners is one of the biggest private equity funds in Korea, but Kim, the son-in-law of late Prime Minister Park Tae-joon, is a U.S. citizen.
In 2020, the National Tax Service was goaded by a consumer activist group into probing the W1 trillion profit the hedge fund made from the sale of the insurer. Tax officials believe Kim pocketed around W100 billion of the money.
The NTS argued that the profit was made from a sale in Korea and that Kim took part in the deal, which requires him to pay taxes here. But MBK Partners said Kim already paid his taxes in the U.S. and spent less than the 183 days in Korea that would classify him as a resident.
MBK hired a major Korean law firm to defend it against allegations that it submitted a false regulatory filing to play down the profit.
The Weekly Chosun reported that Kim has already paid up without turning to a tax tribunal or filing an administrative lawsuit, as he admitted to the NTC for tax evasion.
Contrary to the facts, executives at MBK when asked by the Weekly Chosun of the penalty, denied that a tax penalty was ever paid, saying the tipoff to the media came from some unionized workers.
The NTS declined to comment directly on the case citing privacy but added the agency is audited by the Board of Audit and Inspection and cannot arbitrarily either mitigate or raise taxes.
The news sparked criticism that the W40 billion tax demand, if made, was too lenient in light of the NTS' usual practice, and sparked suspicions that Kim was offered a special favor if he settled quietly.
