The prosecution raided five locations including Daewoo International headquarters on Wednesday in a widening investigation into offshore tax evasion and money laundering allegedly attempted by weapons brokers here.

Investigators believe that the arms dealers illegally transferred billions of won they received in kickbacks to a paper company overseas and brought the money back to Korea.

Brokers allegedly took kickbacks from an Indonesian aircraft manufacturer that won a 150-billion-won bid to sell four patrol aircraft to the Korea Coast Guard in 2008.

The dealers were former senior executives of Daewoo International, one of the major trading companies in Korea. They are thought to have received billions of won in kickbacks after they made the deal. Generally, dealers get about 3 to 5 percent in rebates on each deal, sources said.

The former Daewoo executives allegedly established a trade firm only identified as “L” and worked for the Indonesian company. Dealers in the company also launched a paper company in the tax haven of British Virgin Islands to allegedly launder the money they received from the Indonesian manufacturer, the prosecution said.

Investigators said they were also looking into allegations that brokers used the laundered money to lobby officials at the Defense Acquisition Program Administration and Korea Coast Guard.

The prosecution said it sent a team of 43 investigators to the five offices including Daewoo International, the trading firm L and the residence of the L’s chairman. Investigators, accompanied by ten customs officers, confiscated computer hard drives, accounting books and other confidential documents to secure evidence of wrongdoing.

This is the first case of alleged offshore tax evasion being investigated by the prosecution under the Park Geun-hye government.

Last month, the government said it would crack down on offshore tax evaders. The Finance Ministry said it would introduce tougher rules on cross-border foreign exchange transactions. The move came after an independent online news outlet revealed a list of high-profile local businessmen who were found to have set up paper companies in tax havens, in an apparent attempt to evade tax.

By Cho Chung-un (christory@heraldcorp.com)