Prosecutors Raid Sampyo Group... Allegations of Unfair Support to Specially Related Companies

Investigation Underway Following Fair Trade Commission Complaint Over Alleged Overpriced Purchase of Ready-Mix Concrete Raw Materials

Seoul Central District Prosecutors' Office, Seocho-gu, Seoul. Photo by Kang Jin-hyeong

The prosecution has launched a forced investigation into Sampyo Group on suspicion of unfairly supporting a company owned by the 'second-generation heir' by purchasing ready-mixed concrete raw materials at inflated prices.

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Kim Yong-sik) has been conducting a two-day search and seizure operation at about 10 locations, including the Sampyo Group headquarters, since the previous day on charges of violating the Fair Trade Act, embezzlement, and breach of trust.

Sampyo Industrial is suspected of funneling approximately 7.5 billion won in unfair profits from 2016 to 2019 to SP Nature, a ready-mixed concrete raw material company where Vice Chairman Jung Dae-hyun, the second-generation heir, is the largest shareholder, with the aim of making SP Nature the parent company of Sampyo Group.

The prosecution began the investigation in August following a complaint from the Fair Trade Commission. The FTC reported that Sampyo Industrial purchased ready-mixed concrete raw materials from SP Nature at prices higher than the market rate, allowing SP Nature to earn a 4% profit margin above market prices on all transactions.

In particular, the FTC's investigation found that Sampyo Industrial maintained the transaction terms with SP Nature despite a decline in sales and operating profits due to the sluggish construction market.