Receive up to 500 million KRW reward for reporting disguised affiliates of large corporations

Fair Trade Commission, Administrative Notice on 'Whistleblower Reward Announcement'

Fair Trade Commission Differentiates Reward Payments Based on Evidence Level When Referring Cases to Prosecution According to Reports
Warning Disposition Entails Reward of 1 Million KRW

[Sejong=Asia Economy Reporter Joo Sang-don] Starting as early as mid-May, whistleblowers who report disguised affiliates of large corporations can receive rewards of up to 500 million KRW. This aims to facilitate the detection of disguised affiliates secretly operated within companies by promoting reporting.

On the 2nd, the Fair Trade Commission (FTC) announced that it will publicly notify for 20 days until the 22nd the amendment to the "Regulations on Reward Payments to Whistleblowers of Violations of the Monopoly Regulation and Fair Trade Act," which includes these details.

Last year, the FTC had already announced a draft amendment to the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, including "reporting disguised affiliates of large corporations" as a subject eligible for reward payments.

This revision aims to establish specific payment criteria for whistleblower rewards given to those who report omissions of affiliates when large corporate groups submit designated data to the FTC.

First, the act of "omitting affiliates when submitting designated data by large corporate groups (disguised affiliates)" was added to the list of acts eligible for whistleblower rewards. The FTC currently prosecutes or issues warnings to the same person (the head of the group) when a large corporate group intentionally omits affiliates. If a report leads to prosecution, a reward of up to 500 million KRW will be paid, and if a warning disposition is issued, 1 million KRW will be paid. The reward rate will be differentiated from 100% to 30% of the maximum reward based on the level of evidence and information, classified as highest, high, medium, or low. If the report of disguised affiliates does not lead to prosecution but multiple legal violations are reported, the maximum payment limit is set at 5 million KRW.

An FTC official stated, "By establishing specific payment criteria for rewards related to reporting disguised affiliates, reporting will be activated, making it easier to detect acts by large corporate groups that evade regulations such as private benefit appropriation through disguised affiliates. We expect this to raise awareness about intentional omission of affiliates and submission of false data by corporate groups, thereby deterring such acts in advance."

The reason the FTC is introducing the reward system for reporting disguised affiliates is also to secure more reliable evidence to prove intentionality, which is key to deciding whether to prosecute the head of the group. In February this year, the FTC prosecuted Lee Hae-jin, Global Investment Officer (GIO) of Naver, for intentionally omitting affiliates in reports. However, the prosecution dismissed the case, stating it was difficult to recognize intentionality by the GIO and staff. This meant there was insufficient evidence to prove intentional omission of affiliates.

The reward system for reporting disguised affiliates will apply to reports or tips submitted after the enforcement date of the amended Enforcement Decree of the Monopoly Regulation and Fair Trade Act, scheduled for the 20th of next month.

This content was produced with the assistance of AI translation services.