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9 Venture Companies, Unreasonable Support of KRW 3.6 Billion to Affiliates

9 Venture Companies, Unreasonable Support of KRW 3.6 Billion to Affiliates

Posted August. 02, 2002 22:10,   


9 major high-tech companies such as Daum Communications, HanSoft and Locus, supported KRW 3.6 billion to affiliates or a representative director unreasonably like the large companies. As this scandal is exposed, they have suffered sanction Korea Fair Trade Commission.

However, some venture companies make an objection and have repelled the measure of the Korea Fair Trade Commission (KFTC).

The KFTC said on August 2, “As the result of illegal inside transaction of high-tech companies from April, we exposed that 9 companies supported KRW 3.6 billion to 17 affiliates through support transaction of KRW 27.5 billion. So, we collected the penalty of KRW543 million from them.”

Exposed venture companies include Korea Information Engineering Service, Daum Communications & Daum Solution, HanSoft, TURBOTEK, UBCare, Locus & Plenus Entertainment, OPICOM, Interpark and Samji Electronics. They imposed the penalty ranging from KRW 5 million to KRW 109 million.

According to the Korea Fair Trade Commission (KFTC), Daum Communications, OPICOM, TURBOTEK and Samji Electronics lent money from KRW 870 to KRW 8.5 billion to affiliates, but didn’t collect the interests or applied the discount interest. Also, Plenus Entertainment and HanSoft provide the deposits of the company to the affiliates as a collateral and they made affiliates borrow the money from the financial institutes with the low interests.

Hansoft, Ubcare, Korea Information Engineering Service and Locus lent the real estates to affiliates with low prices or didn’t receive the prices in time. , Korea Information Engineering Service also lent a software and copyright to affiliates without compensation.

According to the Korea Fair Trade Commission (KFTC), Interpark issued the bond with Warrant (BW) of KRW 20,000 in May 1999 and then sold to Gim Gi-Hyeong, the representative director of the company for KRW 10,000.

Jang Hang-Seok, the director of Research Bureau, KFTC said “Only Interpark did the supports to CEO. So, the calculated penalty was KRW 1,760 million because of the large amounts. However, we imposed only KRW 27 million because the penalty can be only 2% of the sales under the fair transaction law.”

However, Interpark repelled “When issuing the new shares to be purchased on April 30, 1999, the issuing price was KRW 8,700. However, when issuing the bonds with warranty (BW), BW was issued for KRW 10,000 considering the CEO was the large shareholder. The disposal of 97,000 shares on May 1 which the KFTC presented on the basis of the calculation of the proper price can not be the basis because they were sold to the related party such as his brothers and friends for expensive prices specially.“

Joong-Hyun Park sanjuck@donga.com