 |
Chung Mong-kyu, Chairman of HDC. (Photo: Yonhap News) |
[Alpha Biz= Kim Jisun] South Korea’s Fair Trade Commission (FTC) has referred HDC Chairman Chung Mong-kyu to prosecutors for allegedly omitting multiple affiliated companies—many owned by relatives—when submitting mandatory designation data, calling it a serious violation that undermines the credibility of the conglomerate designation system.
The FTC said on March 17 that Chung, as the designated controlling shareholder of the cross-shareholding-restricted business group “HDC,” failed to include a number of affiliates in filings submitted between 2021 and 2024. The decision followed deliberation by the commission’s subcommittee.
According to the FTC, Chung excluded 17 to 19 affiliates each year during the period, with a total of 20 unique companies omitted after removing overlaps.
Of those, 12 companies were controlled by his maternal uncle’s family, while the remaining eight were owned by his sister and her spouse’s family.
If properly classified as affiliates, these companies would have been subject to disclosure requirements and regulations aimed at preventing self-dealing. However, due to the omissions, they were not subject to such oversight.
Some of the omitted firms were found to have maintained long-term internal transactions with HDC affiliates. The FTC also noted that the combined assets of the omitted companies exceeded 1 trillion won.
The commission said it does not view the case as a simple oversight. It cited Chung’s long tenure as group chairman and evidence suggesting that the company internally reviewed whether the firms qualified as affiliates and could face regulatory scrutiny.
However, taking the statute of limitations into account, the FTC limited its enforcement action to violations occurring from 2021 onward.
Although some of the omitted companies were later excluded from the group after meeting criteria for independent family management or changes in ownership, the FTC said this does not negate the illegality of the prolonged omission.
Under the Monopoly Regulation and Fair Trade Act, submitting false designation data can result in penalties of up to two years in prison or a fine of up to 150 million won.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
