A Seoul district court on Thursday denied an arrest warrant for the head of a major family-run conglomerate suspected of creating large amounts of slush funds and evading taxes.

Hyosung Group Chairman Cho Suck-rai, who underwent questioning by prosecutors twice last week, is facing multiple charges, including embezzlement, tax fraud and breach of trust, prosecutors said.

"There is not enough reason to detain (Cho) at the present stage considering the evidence, investigation process, and the defendant's age and medical history," said Jeon Hyu-jae, a judge from the Seoul Central District Court.

Prosecutors sought the warrant on Friday, alleging that the 78-year-old industry mogul played a leading role in cooking the group's books for the past decade to cover up losses incurred during the 1997-8 financial crisis, prosecutors said. The country's 26th-largest business group has allegedly evaded several hundred billion won in corporate taxes through the accounting fraud, they added.

Prosecutors also suspect that the owner family has kept shares under borrowed names since the 1990s to evade transfer and income taxes worth more than 100 billion won ($94 million).

The group is additionally suspected of establishing shell companies in tax havens in the 1990s with money borrowed from local banks and having made illegal profits by trading shares on the local stock market with secret funds from the offshore paper firms, they said.

The probe began in late September when the country's tax agency filed a complaint with the prosecution against Cho and several other executives for allegedly leading the tax evasion scheme.

Prosecutors have so far raided the homes and offices of Cho and other executives and grilled two of Cho's three sons -- Cho Hyun-joon, the oldest son and president of Hyosung Group, and Cho Hyun-moon, the second son.

The group, with more than 11 trillion won in assets, has businesses mainly in the fields of energy and heavy industry. (Yonhap News)