4 Hynix men face U.S. prison

Four managers at Hynix Semiconductor Inc. have agreed to plead guilty and accept prison terms on charges of participating in a global price-fixing cartel, the U.S. Justice Department said yesterday. Hynix is the world’s second-largest computer chip manufacturer. “To preserve the integrity of our free market economy, individuals who defraud American businesses and consumers by participating in international price-fixing conspiracies will be prosecuted and sent to prison no matter where they live or where they commit the crime,” Alberto Gonzales, U.S. attorney general, said in a statement. This is the first time that Korean corporate officials have faced prison time abroad on price-fixing charges. The plea bargain must be accepted by the San Francisco U.S. District Court. The case, in which fines have also been levied against Samsung Electronics, resulted from a U.S. investigation into price-fixing in the global dynamic RAM chip market. That global market is worth an estimated $25 billion. The conspiracy to set prices, the Justice Department said, was active from April 1999 to June 2002. Managers from Infineon Technologies AG pleaded guilty to similar charges in December 2004 and served prison sentences of four to six months each. Like the Hynix managers, they also were fined $250,000 each. Several Samsung Electronics managers also face U.S. criminal charges. The four men, according to the Justice Department statement, are D.S. Kim, Hynix’s general manager for worldwide sales and marketing; C.K. Chung, the director of global strategic account sales; K.C. Suh, senior manager, memory product marketing, and C.Y. Choi, general manager for marketing and sales support at Hynix’s German subsidiary. The other three men worked for Hynix’s U.S. arm or at its headquarters in Seoul. In addition to the fines, they were sentenced to between five and eight months in prison and, as part of their plea bargain, agreed to cooperate in further investigations of the price-fixing scheme. The Associated Press quoted James Kim, Hynix’s investor and public relations officer in Seoul, as saying the plea agreements were a “personal issue.” He said, “Hynix as a company does not want to make any official comment as the case is not about the company itself.” Hynix agreed to pay $185 million in May 2005 to settle criminal charges against the corporation. Samsung agreed to a $300 million fine last October, the largest imposed in such a case during the Bush administration. Micron Technology, the only U.S. firm accused of being a member of the cartel, agreed to cooperate with the investigation in exchange for immunity. The news brought some uneasiness in Korean corporate circles about the possibility of increased scrutiny of Korean business practices by the United States and other governments. Hynix chips have also attracted countervailing duty charges in the U.S., Japanese and EU markets after it was charged with receiving illegal government subsidies in the wake of the 1997-98 financial crisis here. Korean Air and Asiana Airlines offices here were raided recently at the request of EU and U.S. officials as part of investigations into suspected price-fixing in air cargo rates. The EU is moving toward anti-dumping duties on Korean refrigerators sold there. But the Korean Fair Trade Commission showed little sympathy for such conspiracy theories, warning domestic companies to stay away from price-setting cartels. “The United States and other industrialized countries have all progressively taken steps to crack down hard on cartel activities, and do not discriminate between local and foreign companies,” said a statement from the commission quoted by Yonhap. The trade body said that 10 foreign executives had been sentenced to prison terms by U.S. courts in the past five years. “If the Hynix executives had not voluntarily admitted to the allegations, the penalty would have been much worse,” said a lawyer at the Bae, Kim & Lee law firm. According to a study by the Ministry of Commerce, Industry and Energy, Korean companies faced 212 anti-dumping investigations in other countries between 1995 and 2005. Anti-dumping duties were imposed in 123 cases, the second-largest number among World Trade Organization member countries. China leads the list, with 317 sets of duties imposed. A scholar at the Samsung Economic Research Institute said the pressure on Korean companies was coming at a bad time, given the pinch they are facing because of foreign exchange rates and international oil prices. He said the only way to cope with such problems was to improve the quality of Korean exports. by Lee Ho-jeong, Lee Hee-sung