FTC sues Lee Kun-hee over fair trade violations

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FTC sues Lee Kun-hee over fair trade violations

On Wednesday, Korea’s Fair Trade Commission (FTC) said that it decided to sue Samsung Electronics Chairman Lee Kun-hee for violating fair trade laws by deliberately failing to submit a full list of the conglomerate’s affiliates to the authorities.

Under Korea’s fair trade law, large conglomerates with assets over 10 trillion won ($9.36 billion), such as Samsung, have to disclose a full list of affiliated companies in order to prevent unfair business practices such as providing loan guarantees to each other.

The country’s corporate watchdog said there were two companies that were found to be effectively affiliated to Samsung but had been left out of the conglomerate’s submitted documents in 2014.

The FTC said the two companies, Samoo Architects & Engineers and its sister company Seoyoung, were under the conglomerate’s construction unit, now known as Samsung C&T, until 2014.

The corporate watchdog said that Samoo and Samsung had been in a close business relationship where the conglomerate accounted for nearly half of Samoo’s sales from 2005 to 2013. Seoyoung is a 100 percent owned subsidiary of Samoo. Samsung and Samoo also used each other’s workforce, the FTC said.

The FTC also said it would report the new findings to authorities including the National Tax Service to redeem unpaid taxes.

The corporate watchdog vowed to conduct thorough investigations into hidden affiliate companies of large conglomerates and respond strictly to violations. Conglomerates in Korea have been under scrutiny from authorities for intricate shareholding structures and hidden affiliated companies.

Lee has been bedridden since suffering a heart attack in 2014 and has not been seen in public in that time.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr ]
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