[Breaking] Hong Won-sik, Former Chairman of Namyang Dairy, Arrested on Charges of Embezzlement and Breach of Trust Involving 10 Billion Won

"Concern of Evidence Tampering" Court Issues Arrest Warrant

Yonhap News

Hong Won-sik, former chairman of Namyang Dairy Products, who is accused of embezzlement and breach of trust involving billions of won and false advertising, was arrested on the 28th.

Nam Cheon-gyu, the chief judge in charge of warrants at the Seoul Central District Court, conducted a warrant hearing for former chairman Hong, who is accused of embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and bribery. After the hearing, the judge issued an arrest warrant citing concerns that evidence might be destroyed. The judge also issued an arrest warrant for Park, former head of Namyang Dairy Products’ research institute, who is accused of receiving tens of billions of won from suppliers as kickbacks (bribery).

Former chairman Hong is accused of causing losses amounting to billions of won to the company by unnecessarily inserting companies run by relatives as intermediaries in transactions while operating Namyang Dairy Products. He is also accused of receiving tens of billions of won from suppliers as kickbacks. Additionally, the prosecution believes that Hong appointed a supplier’s representative as an auditor of Namyang Dairy Products and then received the auditor’s salary back, and misused the corporate credit card for personal purposes.

The prosecution also believes that Hong was involved in the so-called ‘Bulgaris incident’ in 2021. It is alleged that Hong participated in falsely promoting Namyang Dairy Products’ dairy product ‘Bulgaris’ as having COVID-19 prevention effects. When the controversy over Bulgaris arose, the prosecution applied charges of instructing evidence destruction, claiming that Hong ordered a phone containing such instructions to be “thrown into the Han River.”

In 2021, amid the Bulgaris controversy, Namyang Dairy Products faced consumer boycotts and police investigations, leading Hong to announce his resignation as chairman. He initially agreed to sell his 53% stake held by himself and his family to Hahn & Company but later reversed the decision. However, following a Supreme Court ruling in January this year ordering him to sell the shares as per the contract, he ultimately transferred management rights. Subsequently, the new management filed a complaint in August against Hong and three former executives for embezzlement and bribery under the Act on the Aggravated Punishment of Specific Economic Crimes. Namyang Dairy Products filed a complaint for embezzlement amounting to 20.1 billion won.