Big Korean family-owned companies under prosecutors’ scrutiny over antitrust violation

2018.09.21 12:53:16 | 2018.09.21 12:53:48

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South Korean prosecutors have launched a probe into some 30 major companies on charges of false reporting of their subsidiary ownership to the Fair Trade Commission after 2014.

The companies under scrutiny include big names like Lotte, Shinsegae and Celltrion and several other family-owned companies, for which investigations may expand to look into new allegations such as unfair subsidiary support or tax evasion.

Sources said on Thursday that Seoul Central District Prosecutor`s Office recently summoned executives from 30 large companies including Lotte, Shinsege, Celltrion, Daum Kakao and NH Bank as suspects.

The companies and family owners are under suspicion of delinquent report by intentionally omitting shares owned under borrowed names or subsidiaries in violation of the Fair Trade Act. Such violations are subject to a fine of up to 100 million won ($89,000). Prosecutors are investigating the purpose of the falsified reports and those involved.

The practices are not new, but the antitrust agency in the past let large companies off with a slap on the wrist. Soft punishment led to moral hazard, prompting them to commit more irregularities. In 2016, the FTC issued a warning to Lotte which had made false reports about stake ownership involving 11 subsidiaries. Similar disciplinary action was taken against Shinsegae, Celltrion, Daum Kakao and NH Bank.

By Song Gwang-sup and Minu Kim

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