Five Groups Fined 31.6 billion Won for Illegal Fair Trading

The Fair Trade Commission (FTC) fined five groups including Samsung, LG, SK, Hyundai Motor, and Hyundai Heavy Industries over 31.5 billion won for alleged illegal insider trading.

In particular, SK was fined 28.6 billion won, over 90 percent of the whole fine, and imposed an additional fine of 1.29 billion won on the suspicion of violating compulsory disclosure.

The FTC announced yesterday that it had investigated 22 subsidiaries of six groups including Samsung, LG, SK, Hyundai Motor, Hyundai, Hyundai and Heavy Industries over the illegal insider trading since June this year and uncovered five of these groups except Hyundai Group to have misappropriated 90 billion won to the 20 subsidiaries through an abnormal practice of transferring healthy units` value to shaky affiliates, fining those groups 31.578 billion won.

Of the five business giants, SK was imposed highest fine with 28.688 billion won, and Hyundai Motor with 2.53 billion won, Samsung with 0.222 billion won, Hyundai Heavy Industries with 0.097 billion won, and LG with 0.068 billion won each by order.

SK Shipping Co. lent 60 billion won to the subsidiary `Asang` and wrote off the debt, deciding that it couldn`t call in the balance of 52.659 billion won last year. Three companies including SK Telecom also were exposed for loaning out 14 billion won to its moribund subsidiary SK Insurance Co. at 2-3 percent rate per annum, according to FTC.

Hyundai Motor is suspected of bolstering up its subsidiaries by roundabout stock trading, laying in 8.3 million shares of INI Steel at 5,100 won (higher than the closing price of the previous day of 4,800 won) from five firms including related firm C&C Capital on the third market, and selling those shared with other ones it already had to Kia Motor at 4,830 won per share.

Samsung re-leased the part of the office where Samsung Everland rented from Joongang Daily to some of its affiliates at a low rent, FTC disclosed.

FTC also investigated whether the groups supported their tycoons but there was no indication or evidence about it. The FTC enforced investigation on LG, invoking back account probe (the right to ask for the financial transaction information but in vain).

“The amount of fine imposed on the groups decreased as the corporations` unfair financial support to financially-strapped subsidiaries` dwindled to around 90.2 billion won, down by 36 billion won from the year 2000", Chang Hang-sok, the Research Bureau chief explained.

Ki-Jeong Ko koh@donga.com