South Korea’s tax authority has embarked on a special tax audit on Jin Air Co., a budget carrier under Korean Air Lines Co. that barely avoided the revocation of its operation license, to investigate tax evasion charges and legitimacy of the retirement pay given to former vice president Cho Hyun-min.

According to industry sources on Monday, the National Tax Service (NTS) conducted the tax probe at the headquarters of Jin Air located in western Seoul. An official from the air carrier said investigators from the NTS seized related materials including computer hard disk but the exact purpose of the probe was still unknown.

On Tuesday, shares of Jin Air closed at 21,650 won, unchanged from the previous session.

Industry watchers believed that the tax agency would look into whether the 874 million won ($780,566) worth severance pay the company had given to Cho Hyun-min was illegal or not. Hyun-min, the youngest daughter of Hanjin Group Chairman Cho Yang-ho, was seated as a board director of the low-cost carrier from 2010 to 2016 although she is a U.S. citizen, violating the Korean aviation law that bans foreigners from registering as directors of local airlines.

The illegal appointment came under scrutiny after she stirred public outcry for her habitual physical and verbal abuses towards employees. Jin Air had been at the risk of losing flight business license due to the wrongdoing but the Korean government last week decided to allow the airline to stay in business after concluding that the cancellation would be harsh on its staff, investors and consumers.

Industry watchers speculated the tax probe on Jin Air is likely to stretch to the owner Cho family who is suspected of avoiding taxes and obtaining illegal profits by collecting tolls through duty-free products broker Miho International owned by Cho Yang-ho’s wife Lee Myung-hee, eldest daughter Hyun-ah, eldest son Won-tae and Hyun-min. The Cho family is under separate multiple criminal investigations for charges ranging from embezzlement to smuggling.

By Moon Ji-woong and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]