Owners of 36 Groups Hold an Average 1.95 Percent Stake

The Fair Trade Commission (FTC) reported on December 27 that owners of major Korean conglomerates and their kin have an average 4.6 percent stake in their companies with which they control tens of subsidiaries.

The FTC unveiled that day the “matrix on contribution structure,” which shows structures of ownership and management of 51 conglomerates with assets of more than two trillion won as of April 1, including the level of stake ownership by relatives of group owners and the state of circulation contributions.

The business community strongly protested, saying that the FTC’s announcement is threatening the principle of rule of law, signaling that the controversy will further escalate.

According to the “contribution structure of each group” released by the FTC, in which owners’ relatives are divided into four groups; spouses, parents and children, blood relatives in the second to fourth degree, blood relatives in the fifth to eight degree, and relatives by marriage in the fourth degree and closer, owners of 36 groups hold an average 1.95 percent stake in their companies. Among them, 13 groups subject to the limit system on the amount of their contributions showed up a bit lower with a 1.48 percent stake in the hands of group owners.

Heads of and their kin own an average 4.61 percent stake among 36 groups, and 3.41 percent among 13 groups subject to contribution amount limitations.

The FTC explained that 469 or 60.05 percent among 781 subsidiaries of the big 36 did not have a single stake in the hands of owners and their kin and that the owners and their relatives practically control the companies through other subsidiaries.

The business community said in response that the FTC’s announcement has high potential for being unconstitutional, by violating Article 17 of the Constitution which stipulates confidentiality and freedom of privacy and confidentiality of a business operation.

Chi-Young Shin Ki-Jeong Ko higgledy@donga.com koh@donga.com