Fair Trade Commission "Park Mundeok, Chairman of HiteJinro, Intentionally Omitted Corporate Group Designation Data... Prosecutor Referral Measures Taken"

HiteJinro "Will Clarify in Prosecutor's Investigation"

[Sejong=Asia Economy Reporter Joo Sang-don] Park Moon-duk, chairman of HiteJinro, is under investigation by prosecutors for allegedly omitting suppliers wholly owned by relatives and concealing relatives when submitting materials for designation as a business group.

The Fair Trade Commission (FTC) announced on the 14th that it detected and reported Park, the same person (head) of the publicly disclosed business group HiteJinro, for deliberately omitting five companies wholly owned by relatives and seven relatives during the 2017-2018 period, as well as the Pyungam Agricultural Corporation during the 2017-2020 period, when submitting materials for designation as a large business group.

According to the FTC, Chairman Park deliberately omitted Yeonam and Songjeong, which are 100% owned by his nephews, when submitting designation materials. The same person was informed in February 2013 that Yeonam and Songjeong were not included as affiliates, but continued to submit designation materials omitting these companies until being pointed out by the FTC in 2019.

To induce mitigation of punishment, the same person planned countermeasures such as having his nephew's father retire from his executive position at HiteJinro Industry, an affiliate, in March 2014. However, after confirming a news article that the asset threshold for the mutual investment restriction business group would be raised from 5 trillion won to 10 trillion won, he anticipated that HiteJinro would be excluded from the large business group and ultimately decided in June of the same year not to voluntarily correct the omission of affiliates.

In addition, Chairman Park omitted three companies?Daewoo Chemical, Daewoo Package, and Daewoo Combine?wholly owned by distant cousins and their sons and grandsons when submitting designation materials. Although aware of the existence of Pyungam Agricultural Corporation, he omitted it when submitting designation materials. The same person submitted inclusion report materials only after the omission of Pyungam Agricultural Corporation was revealed during the FTC's on-site investigation last year.

Along with this, Chairman Park omitted seven relatives related to the three companies including Daewoo Chemical when submitting designation materials. The FTC requires that all relatives (within six degrees of blood relation and four degrees of affinity) of the same person be listed in the relative status materials when submitting designation materials. The FTC viewed that the omitted relatives were already known to the same person, and that by omitting relatives, affiliates held by relatives that were not included could conduct internal transactions outside the scope of external monitoring systems (regulatory agencies, civic groups, etc.).

Accordingly, the FTC decided to file charges against Chairman Park in accordance with the 'Guidelines for Prosecution of Violations of Reporting and Data Submission Obligations Related to Business Groups.' It judged that there was a clear or considerable possibility that Park was aware of the false submission of the designation materials.

An FTC official said, "We expect this to serve as an opportunity to raise awareness by strictly sanctioning the omission of affiliates and relatives that undermine the foundation of policies to curb economic power concentration," and added, "This action is also significant in reaffirming that the same person is in a position to actively review the contents as the obligated party for submitting designation materials."

Regarding the FTC's action, HiteJinro stated, "During the FTC investigation process, we explained that all the relevant affiliates are independent from the same person and operate independently, and that there was no intentional concealment or special intention to gain benefits, but it seems this was not sufficiently reflected, which is regrettable," and added, "We will sincerely cooperate with the upcoming prosecution investigation and provide sufficient explanations."