[Wealth Succession] TYM② Continued Sales Boost for Daughter of Chairman Kim Heeyong Facing 'Dismissal Recommendation'

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Sowon Kim, Executive Vice President and Chief Strategy Officer (CSO) of TYM.

TYM, an agricultural machinery specialist company (formerly Dongyang Moolsan), has been continuously boosting sales to a personal company owned by Kim So-won, executive director and eldest daughter of Chairman Kim Hee-yong. Despite controversies in 2022, internal transactions have continued. Since Executive Director Kim recently received a dismissal recommendation from the Financial Services Commission due to excessive sales reporting, attention is focused on whether the transactions will continue.

According to the Financial Supervisory Service's electronic disclosure system on the 5th, TYM purchased 6.7 billion KRW from Dongyang Media Sales in the third quarter of this year. Compared to last year, when total purchases from Dongyang Media Sales were around 1.7 billion KRW, this is a sharp increase.

TYM stated that it signed an export agency (forwarding) contract with Dongyang Media Sales. They explained that due to recent increases in logistics costs, payments were made on a larger scale than last year.

However, forwarding is not the main business of Dongyang Media Sales. Established in 2013, Dongyang Media Sales is a publishing company that sells books and magazines. It operates a book platform called "Octobooks," which imports and distributes overseas children's books. As of the end of August 2022, the 100% largest shareholder is Kim So-won, TYM's Chief Strategy Officer (CSO) and executive director. The current CEO, Choi Moon-sung, is Executive Director Kim's husband.

Transactions between TYM and Dongyang Media Sales have been controversial in the past as well. Dongyang Media Sales is a company that grew with support from TYM. In 2015 and 2016, Dongyang Media Sales' sales were 4.2 billion KRW and 6.5 billion KRW respectively, about half of which came from TYM. At that time, TYM purchased a large volume of books and publications from Dongyang Media Sales.

Since 2020, TYM has paid money under the name of service fees rather than purchasing book inventory. TYM signed a marketing agency contract with Dongyang Media Sales. However, Dongyang Media Sales is not a marketing agency. Therefore, Dongyang Media Sales contracted with another marketing agency to carry out the work. TYM inserted Dongyang Media Sales into contracts it could have handled directly.

TYM is supporting Executive Director Kim not only through Dongyang Media Sales but also through TYM ICT. TYM ICT is a corporation developing autonomous agricultural machinery. After Executive Director Kim established it in 2020, it was sold to TYM amid controversies over favoritism toward the owner's family company. However, Executive Director Kim still serves as the CEO.

In the third quarter of this year, TYM purchased about 4 billion KRW worth of inventory and other items from TYM ICT. More than 95% of TYM ICT's total sales came from TYM. In the past, TYM purchased autonomous driving-related parts from external companies, but after establishing TYM ICT, it has been purchasing parts through this company. As the company accumulated deficits, TYM additionally increased its capital by 6 billion KRW.

Although the company is supporting Executive Director Kim both materially and financially, her internal control is expected to weaken. The Financial Services Commission's Securities and Futures Commission issued a dismissal recommendation for Executive Director Kim due to violations of TYM's accounting standards.

TYM was fined about 1.1 billion KRW, designated an auditor for three years, and received a dismissal recommendation for the responsible executive due to overstatement of sales and cost of sales by recognizing sales for some agricultural machinery whose control had not been fully transferred in 2022.

A TYM official stated, "Transactions with Dongyang Media Sales are normal transactions based on properly concluded contracts through competitive bidding every half year," and added, "TYM ICT is a research and development corporation that requires support from the parent company, and profitability will be improved from the commercialization stage."