Large Korean conglomerates with assets of 5 trillion won ($4.6 billion) or more will be made to disclose business transactions and deals with their units offshore in addition to those at home in compliance with tougher scrutiny over illicit profiteering and tunneling practices.
According to sources on Tuesday, the Fair Trade Commission (FTC) recently notified the changes in the local disclosure rule to include transactions between a major local conglomerate and its foreign-based subsidiaries and affiliates.
The antitrust watchdog also required big business groups to disclose trademark revenue from overseas units.
The FTC changed the rule to crack down on chaebols’ easy profiteering through foreign-based subsidiaries that were not subject to the local disclosure rule. The current fair trade law requires business groups with assets of more than 5 trillion won to get board approval before disclosure for intra-group transactions of more than 5 billion won or 5 percent of their equity capital.
Any business groups who fail to follow the changed rule would face heavy fines.
The business community questioned the fairness of the move as foreign-based subsidiaries are subject to foreign law.
Korean conglomerates are often in news for illicit intra-group trading that is blamed for unfairly benefitting owner families financially. Some chaebol companies are also criticized for using the inter-affiliate trading as a way to strengthen the owner family’s grip of the company.
By Seok Min-soo and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]