'Illegal Capital Appropriation' MBN Avoids License Revocation... 6-Month Business Suspension

[Image source=Yonhap News]

[Asia Economy Reporter Joselgina] The comprehensive programming channel MBN (Maeil Broadcasting), which violated the Broadcasting Act by illicitly covering capital, has been suspended from operations for six months. The decision to revoke the comprehensive programming channel license, considered the worst-case scenario, was avoided.

On the afternoon of the 30th, the Korea Communications Commission (KCC) held a plenary meeting and announced that it decided to impose a six-month suspension of all broadcasting operations on MBN for obtaining initial approval in 2011 and re-approvals in 2014 and 2017 through false or other fraudulent means, in accordance with Article 18 of the Broadcasting Act and Article 17 of its Enforcement Decree.

First, the KCC stated, "At the time of MBN's launch as a comprehensive programming channel in 2011, it used nominee shareholders among executives and employees to pay part of the paid-in capital (395 billion KRW) with company funds, submitted false documents during the initial approval in 2011, thereby deceiving the government and engaging in acts recognized as fraudulent under social norms to obtain approval as a comprehensive programming channel (PP). Furthermore, during the re-approvals in 2014 and 2017, it submitted false shareholder registers and financial statements to obtain re-approval as a comprehensive programming channel," it pointed out.

The KCC judged that these illegal acts correspond to obtaining approval and re-approval through false or other fraudulent means under Article 18 of the Broadcasting Act. However, before imposing the six-month suspension, a grace period of six months was granted to minimize damage to viewers and partner companies such as external production firms caused by the suspension.

Additionally, to prevent infringement of viewers' rights due to the suspension, it was mandated that the suspension be announced via broadcast captions and the website, and recommended that a suspension video be aired to inform about the broadcast interruption. The KCC also required the preparation of management innovation plans including protection and employment stability measures for partner companies such as external production firms, disciplinary plans for executives involved in illegal acts, and establishment of systems to ensure management transparency.

Alongside this, the KCC recommended that MBN devise a capital increase plan or other measures to restore the capital reduced by the cancellation of nominee shares, which are treasury stocks, in 2020, so that the full capital of 395 billion KRW promised at the time of initial approval can be properly paid in.

The KCC decided to file criminal charges against MBN and the representatives at the time of the violations under Article 105 (Penalties) of the Broadcasting Act and Article 137 (Obstruction of Official Duties by Deception) of the Criminal Act.

Separately, the re-approval review for MBN and JTBC, whose re-approval validity period is set to expire on the 30th of next month, will proceed as scheduled. Regardless of this administrative sanction, the re-approval decision will be made in November after review by the evaluation committee.

The KCC stated, "Although broadcasters are media institutions based on public trust and have the obligation to expose and monitor illegal acts and corruption in society, MBN itself committed illegal acts, and thus strict punishment under broadcasting laws is necessary. We will strictly operate the broadcaster licensing and approval system according to laws and principles to prevent illegal acts during the licensing and approval process from recurring."

Earlier, MBN issued a public apology, stating, "We deeply reflect on the occurrence of such incidents at a broadcaster whose lifeblood is public interest and sincerely apologize to the public."