Doosan fined for violating financial affiliate ban

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Doosan fined for violating financial affiliate ban

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Doosan, one of Korea’s largest family-run conglomerates, faces a 5.6 billion won ($5 million) fine for violating the ban on subsidiaries’ ownership of shares in financial affiliates.

According to the Fair Trade Commission yesterday, Doosan Corporation, Doosan Heavy Industries and Construction, Doosan Infracore and Doosan E&C violated the prohibition on holding stakes in affiliated financial units.

Doosan Corporation is the holding company of the group and Doosan Heavy is the only subsidiary. Doosan E&C and Doosan Infracore are affiliates of the heavy industries unit.

The country’s fair trade law stipulates that a holding company and its subsidiaries and affiliates cannot own shares in their financial units.

A holding company should have over 100 billion won in assets, while the stock values of subsidiaries owned by the company should account for more than 50 percent of its total assets.

However, Doosan Corporation, had a 0.43 percent stake in Doosan Capital. Doosan Heavy and Doosan Infracore each was holding a 14.28 percent stake in the capital unit.

Doosan Capital also owned a stake of as much as 97 percent in BNG Securities Brokerage.

The antitrust agency found Doosan E&C had a 42.86 percent stake in NeoTrans, operator of the new Bundang subway line.

The law also bans affiliates from owning shares in one another.

According to the FTC, the agency granted a two-year grace period for the conglomerate to withdraw their stakeholding structure in January 2009 when the group launched the holding company.

Doosan asked for another grace period, citing falling stock prices and losses. The FTC approved it until Dec. 31, 2012.

Before the authority began its investigation into the group this year, Doosan Corporation, Doosan Heavy and Doosan Infracore had sold off their shares in the capital unit.

However, the commission decided to impose the fine due to worries about similar violations in the future.

The heavy industries subsidiary will have to pay 2.7 billion won, the largest fine. Doosan Infracore should pay 2.5 billion won and Doosan Capital 238 million won.

The holding company has been told to pay 70 million won. The E&C unit has been fined 1 million won, but it should sell its stake in NeoTrans within a year.

Doosan E&C has been trying to sell off the subway operator in order to ease liquidity problems since last year.

BY SONG SU-HYUN [ssh@joongang.co.kr]

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