Prosecutors Do Not Indict Former Taekwang Chairman Lee Hojin for Forcing Subsidiaries to Buy Kimchi and Wine

No Evidence to Prove Involvement, Case Dismissed Without Charges

Former Chairman Lee Hojin of Taekwang Group Photo by Yonhap News

[Asia Economy Reporter Seongpil Cho] The prosecution has decided not to indict former Taekwang Group Chairman Lee Hojin, who is accused of forcing group affiliates to purchase kimchi and wine produced by a company owned by the chairman's family. Separately, Lee is currently serving a three-year prison sentence confirmed by the Supreme Court in June 2019 for embezzlement and breach of trust.

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Ko Jinwon) announced on the 18th that Lee would not be prosecuted due to "lack of evidence to acknowledge involvement." However, the prosecution added that Kim Giyu, then head of Taekwang Group's Management Planning Office who allegedly ordered the acts, was indicted without detention on charges of violating the Monopoly Regulation and Fair Trade Act. Additionally, 16 affiliates that purchased kimchi and wine under Kim's instructions received suspended prosecution considering their involvement and fines imposed, while three affiliates that were dissolved through mergers were dismissed for lack of jurisdiction.

Kim is accused of having 19 affiliates purchase kimchi produced by 'Tisis,' owned by the Lee family, at inflated prices from April 2014 to September 2016. The transaction amount at the time was investigated to be approximately 9.5 billion KRW. Around the same period, affiliates were also made to purchase wine sold by 'Merbang,' which is 100% owned by the Lee family. This transaction amounted to about 4.6 billion KRW. Kim is reported to have set the kimchi prices two to three times higher than market prices and allocated purchase quantities to each affiliate, directing the purchases accordingly.

Earlier, the Fair Trade Commission uncovered these facts and in 2019 reported Lee, Kim, and the affiliates to the prosecution, imposing fines totaling 2.18 billion KRW.

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