The National Tax Service (NTS) has launched a series of tax investigations on major companies such as Lotte, POSCO, Hyundai Motor Company, Hyosung, and Daewoo Engineering & Construction, triggering suspicions that the government is pressuring the conglomerates.

Some doubt the motive behind the tax investigations targeting a number of businesses which received favors under the Lee Myung-bak government and whose owner families have special ties with the previous government.

According to politicians and NTS officials on September 5, Cho Seok-rae, chairman of Hyosung Group had been included in the economic mission to accompany President Park Geun-hye on her trip to Vietnam, but was excluded at the last minute.

The National Tax Service launched a special tax investigation on Hyosung at the end of May. This investigation turned into an investigation on the violation of tax regulations, and Cho has been banned from leaving the country.

The NTS discovered a large amount of property under another name, and will determine whether or not to submit the case to the prosecutors within this month. Cho is the uncle of Cho Hyun-bum, vice president of Hankook Tire and also the son-in-law of former President Lee Myung-bak.

A special tax investigation was launched into Lotte Shopping last month, less than a month since a tax investigation on an affiliate, Hotel Lotte had ended, further raising suspicions on the motive behind the investigation.

The owner families including Shin Kyuk-ho, chairman-in-chief of Lotte Group, and Shin Dong-bin, the group's chairman are the largest shareholders of Lotte Shopping, which is an actual holding company. Lotte Group received a permit to construct the Lotte World Tower in 2009, and is known as the largest beneficiary of the Lee Myung-bak government.

Last month, Hyundai Motor also received notice of a tax investigation. This will be a regular tax investigation conducted for the first time in six years since a special tax investigation was launched in 2007. However, as a company which benefited from the previous government along with Lotte, experts question whether the investigation is of a political nature.

Hyundai Motor is estimated to have received huge benefits through several tax incentives under the Lee Myung-bak government. There are rumors that Daewoo Engineering & Construction, which is currently undergoing an intense tax investigation, has something to do with the 4 Major Rivers Project. Prosecutors are investigating Daewoo on allegations of corruption and slush funds related to the 4 Major Rivers Project.

Shortly after the Park Geun-hye government entered office, there was word inside and outside the prosecutors' office that an inspection would be carried out on businesses related to the former government including Hyundai Motor, Lotte and Hyosung.

Some experts claim that while in the past, prosecutors led these investigations of businesses after a new government took office, now the National Tax Service is first filtering out these cases with a tax investigation focused on punishment. In other words, the National Tax Service is first pressuring the businesses with a tax investigation on issues which the new government needs to resolve.
Word from inside and outside Cheong Wa Dae also speculate that the tax investigation on POSCO is also a means to pressure the chairman, Chung Joon-yang to resign.

However, the National Tax Service clarified that these are groundless rumors. A tax service official said, "We are only conducting the tax investigation based on law and principles."

Another official said, "I think large businesses are leaking information on the tax investigation to make it look like they are being pressured in their business activities by legislation concerning 'economic democratization'." He added, "More than 100 large companies undergo a tax investigation in a year, so there is bound to be a few connected with the previous government."