Senior Former Fair Trade Commission Officials Serve as Outside Directors in 37 Companies... 'Preparing for the Fair Trade 3 Laws'

Preparation for Fair Trade Commission Investigation in Case of Emergency

[Asia Economy Reporter Moon Chaeseok] It has been revealed that former officials from the Korea Fair Trade Commission (KFTC) are heavily positioned in the outside director seats of large corporations.

This is interpreted as a measure to prepare for various potential accusations following the passage of the Fair Economy 3 Acts (amendments to the Commercial Act and the Fair Trade Act, and the enactment of the Financial Group Supervision Act) and to proactively respond to KFTC investigations in case of emergencies.

According to the Financial Supervisory Service's electronic disclosure system on the 27th, among listed companies that submitted semi-annual reports, 37 have appointed former officials such as former KFTC Chairpersons, Vice Chairpersons, and Secretariat Chiefs as outside directors or auditors.

Hyundai Glovis, which will fall under the regulation of internal transactions once the Fair Trade Act amendment passes, appointed Lee Dong-hoon, former KFTC Secretariat Chief, as an outside director. Lee also serves as an outside director at DB.

Hyundai Motor Company also appointed Lee Dong-gyu, a former KFTC Secretariat Chief, as an outside director.

Former KFTC Chair Baek Yong-ho is on the board of LG Electronics; former KFTC Standing Commissioner Ahn Young-ho serves at LG Chem and Shinsegae; and former Standing Commissioner Jung Joong-won is an outside director at Lotte Chemical and Jin Air.

Former Chair Kim Dong-soo was appointed as an outside director at Doosan Heavy Industries; former Chair Noh Dae-rae at Helixmith; and former Chair Jung Ho-yeol at JS Corporation.

Kim Won-jun, former Acting Secretariat Chief of KFTC, also holds an outside director position at Hanil Hyundai Cement. Kim Byung-il, former Vice Chair, became an outside director at Samchully starting this year.

Since the Fair Economy 3 Acts have been discussed since the 20th National Assembly, it is interpreted that large corporations have proactively recruited high-ranking former KFTC officials, anticipating preferential treatment for former officials.

In particular, if the multiple derivative suit system, which allows even a 1% parent company shareholder to file a damages lawsuit against subsidiary directors, is passed, many large corporations will be significantly affected.

With the abolition of the KFTC's exclusive right to prosecute, anyone will be able to report companies to the prosecution for serious collusion cases such as price-fixing and bid-rigging (hard-core collusion).

The heavy presence of former officials as outside directors is also interpreted as a strategic move to prepare for potential KFTC investigations.

For example, Hanjin appointed Son In-ok, former KFTC Vice Chair, as a new outside director in March, several months before the KFTC decided to impose an 8.7 billion KRW fine in July. Son also serves as an outside director at Hyundai Motor Securities.

Former Head of the Subcontracting Division, Lim Young-chul, is currently active at BGF Retail, which was fined approximately 1.7 billion KRW by the KFTC earlier this year.

KFTC Chair Cho Sung-wook also served as an outside director at Hanwha Group from 2010 to 2013. However, Chair Cho did not attend the plenary meeting that reviewed allegations of internal transaction favoritism involving the Hanwha Group's controlling family.