Deutsch Motors says company not under investigation, sees no financial impact

Deutsch Motors said Wednesday that the indictment of former Chairman Kwon Oh-soo and his wife on tax evasion charges is "a personal tax matter" that will have no effect on the company's operations or finances. The automaker also said construction work at its showrooms and service centers that prosecutors have questioned was already verified as genuine and fairly priced during a past National Tax Service audit.

Deutsch Motors issued a statement Wednesday saying "Deutsch Motors as a corporate entity is not itself a subject of the current prosecution investigation."

Prosecutors at the Seoul Central District Prosecutors Office's tax crime investigation unit indicted Kwon and his spouse Tuesday on charges including the issuance of false tax invoices under the Act on the Aggravated Punishment of Specific Crimes. Prosecutors allege the couple exchanged approximately 26.6 billion won ($19.6 million) in false tax invoices between November 2017 and October 2021 by funneling construction contracts for the group's showrooms and interior work to shell companies and other affiliated entities. The amount allegedly evaded in gift tax and comprehensive income tax is about 650 million won.

Deutsch Motors maintained that the transactions prosecutors have flagged were not fictitious. "The construction projects mentioned in the reports were actual transactions carried out to build showrooms and service centers nationwide," the company said, adding that the actual execution of the work and the appropriateness of the prices had already been verified during a past National Tax Service audit.

The company also drew a line against any suggestion that the indictment could translate into a financial burden for the corporate entity.

"This matter concerns only the payment of personal taxes such as comprehensive income tax and gift tax, and there is absolutely no impact on the company's operations or finances," Deutsch Motors said.

"Separately from any future legal proceedings at the individual level to establish the truth, Deutsch Motors as a corporate entity will not be affected in any way," the company added. "Therefore, there is absolutely no possibility of any loss arising for the company going forward."

The merits of the prosecution's charges are expected to be determined through the trial process.