AGO probing 3 garment firms for tax evasion

The Attorney General’s Office disclosed yesterday that it is investigating at least three garment factories for possible tax evasion.

CNMI chief prosecutor David declined to name the three companies being investigated, but said that the AGO is now assessing whether or not they evaded paying taxes, among other possible violations of law.

“The attorney general [Pamela Brown] has made this her priority. She’s called various assistant attorneys general and agencies together for a fast analysis of the problem and to be proactive in dealing with it,” he said.

Hutton refused to comment when asked for the estimated amount of unpaid taxes the three undisclosed garment factories potentially owe the CNMI government.

This comes soon after the filing of criminal charges against garment firm Sako Corp. and two of its officers for alleged failure to account for and pay taxes as required by the CNMI Tax Code.

Hutton claims that Sako Corp.’s unpaid taxes amount to approximately $1.3 million.

Sako and its two officers—Hee Kun Kyun and Hyung Ki Min—are facing 18 counts of willful failure to pay taxes at the Superior Court.

Assistant attorney general Kevin Lynch filed the charges Monday, saying that Sako and the two company officials deliberately failed to pay taxes on several taxable quarters from July 31, 2002 until Jan. 30, 2005. Each count entails a maximum penalty of two years imprisonment, a 10,000 fine, or both.

Hutton said the AGO might ask the court to seize the company’s money and equipment and place it on escrow.

“Upon the requisite showing of probable cause, it is possible to petition [the court] through one of the various agencies represented by the AGO,” Hutton said.

The AGO’s probe on Sako and its affiliate companies—Mariana Fashions and Dong Dang Fashion Corp.—began after the firms decided to cease business operations on Saipan. The AGO had requested the court for the detention of three other officers of the companies as “material witnesses” to the probe. The court granted the petitions, but the officers—Jun Young Ham, Ha Myung Sam and Karmina Okamura—have been released from jail after posting bail.

Earlier reports said that Sako managed to ship some of its equipment to Cambodia. The AGO pursued its probe on the company and pressed charges against it and two of its officers, suspecting that the defendants would transfer money and equipment out of the CNMI and evade tax payments.

The prosecutor refused to comment when asked if any of those officers who were detained sometime last month would also be charged criminally, but said that he would review the petitions for detainment and interview the witnesses, whom he described as “not uncooperative.”

One of the defendants who has been charged in court, Hee Kun Kyun, has already fled the CNMI. The AGO discovered that the man has seven different passports and that he used a different passport other the one he had used in entering the CNMI.

The prosecutor had also disclosed that another Sako officer, Kwon Myung Hee, also fled the CNMI “to hinder or thwart the criminal investigation and/or to avoid possible criminal prosecution,” but no charges have been filed against that person yet.

Garment factories on the island are undergoing severe financial pressure due to the drop in garment sales following the implementation of the World Trade Organization-mandated lifting of quota restrictions on apparel.