Interchaebol deals rose by 38.9 trillion won in 2017

Transactions among affiliates of Korea’s large business groups rose slightly in 2017 compared to a year earlier due to a rise in the number of conglomerates subject to strict regulations aimed at curbing insider trading, the country’s corporate watchdog said Wednesday.

A total of 191.4 trillion won ($169 billion) worth of interaffiliate deals by 1,779 units of 60 conglomerates were made last year, up 38.9 trillion won from a year earlier, according to the Fair Trade Commission (FTC).

But the deals accounted for 11.9 percent of all business contracts inked by them last year, down from 12.2 percent a year earlier, it added. The number of business groups subject to the tough FTC surveillance rose to 60 from 27 over the one-year period, as the watchdog lowered the asset criteria to 5 trillion won from 10 trillion won in May last year. The business groups’ equity investments and inter-affiliate loan guarantees are overseen by the FTC.

The current law forbids interaffiliate trading within a business group whose owner and family hold more than 30 percent of the shares in an affiliate. Such trading is blamed for allowing owner families to easily amass large profits by having subsidiaries award lucrative contracts to each other, undermining the principle of fair competition. SK Group, an energy and telecom conglomerate, saw the largest increase in interaffiliate deals last year, with a value of 13.4 trillion won, followed by LG Group with 3.4 trillion won and Samsung Group with 2.94 trillion won. In terms of the value of interaffiliate trading, SK Group came in first with 42.8 trillion won, trailed by Hyundai Motor Group with 31.8 trillion won.

In contrast, Lotte, Shinsegae and Daewoo Shipbuilding & Marine Engineering reported a sharp drop in their interaffiliate trading last year, according to the FTC.

Yonhap