 |
Youngone Corporation headquarters. (Photo courtesy of Youngone Corporation) |
[Alpha Biz= Paul Lee] For decades, Youngone Corporation has been synonymous with uninterrupted profitability and global success, symbolized by its flagship brand The North Face. Now, that reputation faces its most serious challenge yet.
Sung Ki-hak, founder and chairman of Youngone Group, has been referred to prosecutors on allegations of deliberately omitting dozens of affiliated companies from mandatory corporate disclosures—the largest such case ever identified by South Korea’s competition watchdog.
The Fair Trade Commission (FTC) announced on March 23 that Sung had failed to report affiliated entities when submitting corporate group designation materials, a requirement under Korea’s fair trade regulations.
Record-Scale Omission
According to the FTC, Sung omitted a total of 82 affiliated companies (after removing overlaps) from disclosure filings between 2021 and 2023—69 in 2021, 74 in 2022, and 60 in 2023. The combined assets of the undisclosed companies amounted to approximately KRW 3.2 trillion (USD 2.3 billion), marking the largest omission case ever uncovered by the commission.
The FTC suspects that the chairman intentionally concealed companies controlled by himself and his relatives in order to avoid being classified as a large business group. In South Korea, conglomerates with total assets exceeding KRW 5 trillion are designated as “large business groups,” a status that triggers extensive disclosure obligations and regulatory scrutiny over internal transactions, unfair support, and related-party dealings.
Avoiding Oversight
Regulators emphasized that the sheer number and scale of the omitted companies make it difficult to view the case as a simple administrative error. As a result of the omissions, Youngone Group avoided being designated as a large business group until 2023, effectively sidestepping disclosure requirements during critical periods.
Industry observers note that key succession-related transactions, including the transfer of shares to Vice Chairwoman Sung Rae-eun, proceeded without public disclosure during this time. This has fueled criticism that the group engaged in regulatory arbitrage and “rule-bending management practices.”
Market Implications
Analysts warn that the case could mark a turning point for Youngone, potentially reshaping investor perceptions of a group long regarded as one of Korea’s most trusted and consistently profitable exporters.
“With governance issues now under prosecutorial review, the market’s valuation of Youngone may no longer rest solely on its financial track record,” said one industry source. “Decades of accumulated trust can erode quickly when transparency comes into question.”
The case adds to growing regulatory pressure on family-controlled conglomerates in South Korea, as authorities intensify enforcement against disclosure violations and governance abuses.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
