FTC probes nonprofit arms of conglomeratesThe Fair Trade Commission (FTC) said on Wednesday that it has launched a probe into nonprofit corporations founded by 57 conglomerates in order to find out whether the nonprofit bodies were set up for the purpose of strengthening the owners’ grips on management control.
“The Fair Trade Commission has requested 57 companies that are listed on stock market to provide information regarding nonprofit corporations they established,” said the antitrust body in a statement.
The FTC made it clear that it was looking into possible tax evasion, as well as the possibility that the owners’ families were using the companies to maintain their control on the conglomerates.
“There has been criticism saying that nonprofit corporations, which belong to the chaebol groups, have merely been used as a means to illicitly extend [owners’] management control without bearing tax liability,” said the FTC.
The watchdog said that it plans to look into whether the nonprofit bodies hold any stakes in the affiliated companies of conglomerates, as well as how they are related to other parts of the group.
Family-run conglomerates are notorious for byzantine cross-shareholdings that strengthen the owner family’s control of the company, and it has been believed that nonprofit corporations have also been used to that end.
The FTC’s move came less than a week after Kim Sang-jo, FTC chairman, called on chaebol executives to voluntarily improve their governance structures.
“When I met with top-level executives at conglomerates [before becoming the FTC head], they all knew the issues at stake and what is required to resolve them,” he told reporters Thursday.
What mattered, he said, is their “willingness to execute their plans” in a timely manner.
BY KANG JIN-KYU [firstname.lastname@example.org]