Korean Air (KAL) chairman Cho Yang-ho, 50, has been arrested on charges of evading taxes and embezzling millions of dollars.
Prosecutors say Cho's younger brother Cho Su-ho and their father Cho Choong-hoon have also been implicated in the scandal, which is said to be the largest tax evasion case in South Korea's history, but the two have yet to be charged.
Widespread reports say prosecutors have charged Cho on allegations he evaded 62.9 billion won ($54 million) in taxes and embezzled billions of won more in company funds. The arrest had been expected and comes after the three Cho family members were grilled by prosecutors for several days last week.
KAL is controlled by the massive Hanjin Group conglomerate, which was founded by 79-year-old Cho Choong-hoon, who was KAL's chairman until earlier this year.
Prosecutors allege that his eldest son took millions of dollars in rebates from Airbus Industrie and Boeing between January 1994 and December 1998 and used a large portion of the cash for private purposes.
South Korea's National Tax Service made public its allegations against the family and their companies early last month, when they said they were pressing for a punitive fine of several hundreds of millions of dollars against KAL.
They said at the time that allegations against the family were focused on suspicions that billions of won were embezzled into slush funds used to help lobby politicians.
The family was also alleged to have diverted millions of dollars into a wholly-owned paper company, KALF, set up tax-free by KAL in Ireland.
Source: Flight Daily News
