Special Prosecutor Probes Tax Evasion Allegations by Firms Tied to NEC Procurement Scandal
Special Prosecutor Lee Tae-han's team said Tuesday (Nov. 18) it had uncovered signs of tax evasion by companies suspected of bid-rigging in election supplies procurement and requested that the National Tax Service conduct a prompt tax investigation. The team said it confirmed that the companies appear to have violated the Tax Penalty Act by, among other things, bringing in shill companies during the bidding process to issue fake tax invoices without any actual transactions.
Citing apparent intent to share illicit profits and evade taxes, the team asked the National Tax Service for a speedy investigation on Nov. 16, requesting that results and supporting materials be submitted by Dec. 15. The tax authorities hold exclusive authority to file criminal complaints under the Tax Penalty Act, meaning prosecutors cannot press charges without a complaint from the NTS chief, a regional tax office head, or a district tax office head. The tax investigation thus serves as a procedural gateway for whether indictments can proceed.
At least five companies are suspected of tax evasion, the most prominent being a ballot box manufacturer run by Mr. A, a former head of the political parties department at the National Election Commission. Mr. A is suspected of winning a bid to supply ballot boxes for early voting in the June 3 local elections by putting forward a shill company (obstruction of bidding).
The team also detected suspected tax evasion at Company B, a maker of polling station supply kits, during a raid on Nov. 14. Company B signed contracts worth a combined 5 billion won with the election commission last year for the 21st presidential election and this year's local elections, covering polling station notices, vests for polling guides, and various stickers and stationery, and won the deals despite offering higher prices than two rival firms.
The special prosecutor's team believes NEC officials took bribes from Company B and rigged the bidding process, including adding extra evaluation committee members and manipulating the scoring methodology.
