Hyundai Chairwoman to face prosecution probe
Hyun Jeong-eun allegedly left out six affiliates, owned by members of her family, from reports submitted to Seoul’s antitrust watchdog
By Lee Hyo-sik
South Korea’s Fair Trade Commission (FTC) said Monday that it will file a complaint with the prosecution against Hyundai Group Chairwoman Hyun Jeong-eun on charges of falsely reporting the group’s ownership.
According to the antitrust agency, by filing false reports, Hyundai Group has been able to dodge the FTC oversight of whether it is involved in inter-subsidiary dealings, designed to offer undue favours to companies owned by the chairwoman’s siblings or nephews.
The FTC officials said Hyun deliberately left out six affiliates, owned by members of her family, from its reports on the group’s affiliate structure, which was submitted to the agency between 2000 and 2015.
Under the Fair Trade Act, business groups with assets valued at more than 10 trillion won (US$8.76 billion) are obliged to disclose the list of their affiliates and of their controlling stakeholders.
But Hyundai Group did not report Hyundai SNS and five companies as its units since 2000, making it possible for the group to conduct unlimited dealings with them without being under any government oversight, FTC said.
“Hyundai Group submitted false reports for many years. But we decided to ask the prosecution to look into the irregularities between 2012 and 2015 because the statute of limitations is set at five years,” a FTC official said. “The maximum criminal penalty is to impose only a 100 million won (US$87,000) fine on violators.”
In May, the FTC levied a 1.25 billion won (US$1.09 million) fine on Hyundai Group for its exclusive deals with the six companies, which was to increase the wealth of Chairwoman Hyun’s relatives holding stakes in the benefiting entities.
In October, Hyundai Group was taken off the list of the country’s conglomerates as its assets shrank to 2.56 trillion won (US$22.43 billion). Only those with assets of 10 trillion won or more are categorised as large business groups.
In April, its assets totaled 12.8 trillion won (US$11.2 billion). But over the past few months, Hyundai has become a second-tier business group after disposing of Hyundai Merchant Marine, Hyundai Securities and other key affiliates to pay for snowballing debt.