Controversy Over Stock Manipulation Scandal by SG Securities
Chairman Position Crisis and Social Contribution Promise
Foundation Establishment Delay Controversy
Former Dow Kiwoom Group Chairman Kim Ik-rae, who sparked controversy by selling 60.5 billion KRW worth of Dow Data shares just before the stock price crash triggered by Soci?t? G?n?rale (SG) Securities, has been selected as a witness for this year's National Assembly audit. Kim Ik-rae had promised to return the proceeds from the sale of his Dow Data shares to society and establish a scholarship foundation, but a year later, the process is still in its infancy, with only the selection of candidates for chairman and secretary general underway. The National Assembly's Political Affairs Committee plans to focus its inquiries on follow-up measures related to the SG Securities-induced stock price crash.
According to the National Assembly on the 4th, the Political Affairs Committee held a plenary session on the afternoon of the 30th of last month and finalized the list of witnesses for this year's audit. Kim was selected as a witness for the Financial Supervisory Service audit scheduled for the 17th of next month.
Two trading days before the limit-down incident involving eight stocks including Dow Data, on the 20th of last month, Kim sold 60.5 billion KRW worth of Dow Data shares through a block deal (large volume off-hours trade). Ra Deok-yeon, CEO of H Investment Advisory, who is under suspicion of stock price manipulation, claimed that Kim's block deal was behind the limit-down incident. As the controversy intensified, Kim held a public apology press conference on May 4th last year, resigning from his positions as chairman of Dow Kiwoom Group and chairman of the Kiwoom Securities board, and pledged to return the proceeds from the sale of Dow Data shares to society. Subsequently, the prosecution investigated the allegations against Kim but dismissed the case without indictment in May.
Upon stepping down as chairman, Kim stated that the social return process would be carried out through the establishment of a foundation. However, a year later, the chairman to oversee the foundation's operations has yet to be appointed. According to Kiwoom Securities, the process of selecting a chairman and secretary general to manage the foundation is currently underway. Among the two follow-up measures Kim pledged to take responsibility for in relation to the SG-induced stock manipulation incident, the social return aspect remains at a standstill. The Political Affairs Committee is also focusing on this issue and plans to question the progress of the foundation's establishment intensively.
A Kiwoom Securities official said, "The foundation establishment is proceeding normally, and once specific plans are finalized, they will be disclosed externally."
Typically, to establish a foundation, the founder must contribute certain assets, draft articles of incorporation according to the corporation's name and purpose, and then apply for corporate establishment approval from the administrative authority overseeing the foundation's purpose (competent authority). An official in charge of ESG (Environmental, Social, and Governance) management at a major domestic conglomerate stated, "The time required to establish a foundation varies depending on its purpose, so it is not easy to judge the sincerity of someone who announces plans to establish a foundation based on a schedule."
However, former Hyosung Vice Chairman Cho Hyun-moon, the second son of the Hyosung family, announced on July 5th that he would donate all the inheritance from his late father, Cho Seok-rae, Honorary Chairman of Hyosung Group, to establish a public interest foundation, and three months later, on September 26th, launched the 'Danbit Foundation.'
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
