[Exclusive] bhc "Received orders from Mr. A who reported BBQ's public interest... Legal action for false testimony and defamation"

Former BBQ Employee A Testifies Receiving Order from BHC Chairman Park Hyunjong to Report
bhc "Clear False Claim, Complaint Filed and Legal Action for Defamation Initiated"

News screen capture.

[Asia Economy Reporter Lee Seon-ae] In 2018, a former BBQ employee, Mr. A, who had reported to a broadcaster that the BBQ chairman used company funds to cover his children's study abroad living expenses, suddenly changed his stance, stating that the report was false and made under the direction of Park Hyun-jong, chairman of bhc. Following this, bhc has initiated legal proceedings for defamation.

According to industry sources including bhc and BBQ on the 24th, Mr. A joined BBQ in 2007 and worked until October 2016 as head of the strategy planning team, CFO, and CEO at the secretary office and Genesis BBQ USA as an expatriate in the United States. He concurrently managed company affairs and cared for Chairman Yoon Hong-geun’s children in the US. After resigning and starting a personal business, Mr. A reported the embezzlement of study abroad funds by Chairman Yoon’s children to a broadcaster in 2018. However, around October 2019, he reversed his position and submitted a statement to BBQ, which was in litigation with the broadcaster, contradicting his original whistleblowing. He testified that the embezzlement allegations were orchestrated by Chairman Park. In response, bhc stated, “This is a clear falsehood,” adding, “We filed a complaint this morning and will proceed with full legal action.”

While working at BBQ, Mr. A, who had a close relationship with Chairman Park, first proposed consulting services to bhc for its US market entry. After two meetings, he signed a consulting contract with bhc for about one and a half years, providing monthly reports and serving as a consulting advisor on US market entry.

During this process, Mr. A expressed a desire to report unethical practices he had experienced during his time at BBQ. Through an introduction by bhc’s PR team, he was connected to a broadcaster where he could make the report. Subsequently, through direct interviews and whistleblowing, the embezzlement of study abroad funds by BBQ’s chairman’s children was exposed in the media, leading to a prosecutorial raid. Mr. A is known to have submitted extensive documents emphasizing his grievances and BBQ’s unethical conduct for the whistleblowing.

However, over time, Mr. A claimed that all his whistleblowing was false and submitted a new statement. The statement obtained by this outlet indicates that the report to the broadcaster was inaccurately reported, that due to financial difficulties he embezzled funds while working at BBQ, and that he received money from bhc to spread false information.

The bhc PR manager explained, “It is true that Mr. A had a consulting advisory contract with us for the US market and that we introduced him to a broadcaster for his report. Later, Mr. A claimed he was being threatened and coerced by a detective hired by BBQ because of his whistleblowing and asked for help, but we refused. We clearly communicated that bhc could not assist and that it was inappropriate to link this issue with consulting. We are also securing recordings related to this.” He continued, “We have detailed recordings and text messages exposing the background and corruption behind the whistleblowing. We only introduced a broadcaster reporter when he wanted to report; we never instructed him. We are pursuing legal action for defamation regarding his false testimony that this was orchestrated, and we will submit all related materials to clarify the reasons for his statement reversal.”

Mr. A’s new statement is considered to have no evidentiary effect. In January, the Seoul Southern District Court dismissed BBQ’s request for a correction and 3 billion KRW in damages against the broadcaster regarding reports that Chairman Yoon and Genesis BBQ Co., Ltd. used company funds for their children’s study abroad living expenses. The court ruled that although BBQ denied misappropriating company funds for Chairman Yoon’s son’s living expenses, the broadcaster’s investigation and BBQ’s submitted evidence made it difficult to view the report as untrue.

Currently, bhc has conducted several local visits to the US to research the market and register trademarks for US entry but has temporarily postponed the entry due to the COVID-19 pandemic. Mr. A’s consulting advisory role ended after the contract period.

Within the franchise industry, this incident is viewed as an attempt by bhc and BBQ to exploit corporate conflicts for personal gain. An industry insider urged, “Both companies should focus on healthy competition for the development of the chicken franchise industry rather than reckless and unproductive conflicts that benefit no one.”

Meanwhile, bhc and BBQ have been engaged in legal battles for years. The dispute began when BBQ inflated the number of stores sold to a private equity fund, leading the fund to seek arbitration from the International Chamber of Commerce (ICC) in 2014. In 2017, the ICC ruled that BBQ must pay 9.8 billion KRW in damages.

There have been various other lawsuits. BBQ signed logistics and product supply contracts with bhc, under which bhc was to supply logistics services and ingredients like sauces to BBQ for up to 15 years, but terminated these contracts in 2017. Bhc filed a lawsuit claiming damages for unilateral contract termination without prior notice, while BBQ countered with accusations of trade secret infringement against Chairman Park and other executives.

The trade secret infringement case was dismissed without charges during the prosecution’s investigation and was officially dropped in September 2018. BBQ appealed, but the appeal was dismissed in August 2019. However, a re-investigation order has been issued and the investigation is ongoing.

Additionally, there have been numerous smaller lawsuits, including a 2014 charge of theft of raw materials for BBQ’s new menu (resulting in a fine), a 2015 lawsuit over payment claims (with partial victory for bhc), and a 2020 acquittal of a bhc employee on charges of breach of duty.