Prosecutors Summon SPC Chairman Heo Young-in for 'Unfair Support to Affiliates and Breach of Trust'

SPC Group Chairman Heo Young-in is making a public apology at the SPC headquarters in Seocho-gu, Seoul, regarding the recent employee death accident that occurred at the affiliate SPL. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kim Hyung-min] The Seoul Central District Prosecutors' Office Fair Trade Investigation Division (Chief Prosecutor Lee Jeong-seop), which is investigating allegations of 'unfair support and breach of trust' by SPC Group's affiliates, summoned Chairman Heo Young-in on the 30th. They are questioning Chairman Heo about whether he ordered unfair support to affiliates or received reports afterward for the purpose of succession of management rights.

SPC Group is suspected of systematically channeling profits to SPC Samlip (hereafter Samlip), whose shares are held by the second generation, in order to increase the stock value and maintain the controlling family's influence over affiliates and succession of management rights. The Fair Trade Commission, which previously investigated this, judged that under the involvement of the controlling family, SPC provided a total of 41.4 billion KRW worth of unfair support to Samlip within the group from April 2011 to April 2019. Accordingly, the Fair Trade Commission imposed corrective orders and fines of 64.7 billion KRW on the affiliates and reported Chairman Heo, Paris Croissant CEO Hwang Jae-bok, and others to the prosecution.

Separately from the Fair Trade Commission's report, minority shareholders of another SPC affiliate, Shani, filed a complaint accusing Chairman Heo and the controlling family of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, claiming they suffered damages due to unfair support to Samlip.

The prosecution considers it inevitable to investigate Heo Jin-su, Chairman Heo's eldest son, but he is currently staying overseas. Heo Hee-su, the chairman's second son and vice president, was investigated on the 23rd. The prosecution plans to handle the case before the statute of limitations expires at the end of next month after completing the investigation of Chairman Heo.

SPC Group strongly denies the allegations. Samlip, which is said to have benefited from unfair support, is the only listed company in SPC Group and has the lowest controlling family shareholding among affiliates, so the group argues that the Fair Trade Commission's claim that they tried to succeed management rights by supporting a listed company is logically contradictory. SPC Group has also filed an administrative lawsuit in response to the Fair Trade Commission's decision.