Prosecutors Summarily Indict Mirae Asset Management and Life Insurance for Concentrated Use of Golf Course by Family of Chairman

First Case of Sole Prosecution under Article 23-2, Paragraph 1, Subparagraph 4 of the Fair Trade Act
Mirae Asset: "Case Not to Be Criminally Reported by Fair Trade Commission... Regret Over Prosecutor's Summary Indictment"

Seocho-dong, Seoul Central District Prosecutors' Office, Seoul. Photo by Seokjin Choi

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] Mirae Asset affiliates have been summarily indicted on charges of providing unfair benefits by extensively using golf courses owned by the chairman's family.

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Ko Jin-won) announced on the 26th that Mirae Asset Global Investments and Mirae Asset Life Insurance were summarily indicted with fines of 30 million KRW each for violating Article 23-2, Paragraph 1, Subparagraph 4 of the Monopoly Regulation and Fair Trade Act (prohibition of unfair benefit provision to related parties).

Article 23-2, Paragraph 1 of the Fair Trade Act prohibits companies belonging to publicly disclosed business groups from engaging in transactions with related parties or affiliates in which related parties hold a certain percentage of shares, thereby conferring unfair benefits to related parties.

Specifically, prohibited benefit provision acts include ▲ transactions under significantly more favorable conditions than normal (Subparagraph 1) ▲ providing business opportunities that bring considerable benefits to the company (Subparagraph 2) ▲ transactions involving cash or other financial products under significantly favorable conditions with related parties (Subparagraph 3) ▲ transactions of considerable scale without reasonable consideration of business capability, financial status, creditworthiness, technology, quality, price, or transaction conditions, or comparison with other businesses (Subparagraph 4). The issue in this case pertains to Subparagraph 4.

According to the prosecution, from January 2015 to December 2016, Mirae Asset Global Investments and Mirae Asset Life Insurance primarily used golf courses operated by Mirae Asset Consulting, which is 91.86% owned by Chairman Park Hyun-joo and the chairman's family, and conducted transactions without reasonable consideration or comparison with other golf courses, thereby unfairly channeling hundreds of billions of KRW in benefits to the chairman's family.

The amount spent by these two companies on golf course usage was investigated to be approximately 24.1 billion KRW in total, accounting for about 72% of the total golf course sales of approximately 15.3 billion KRW in 2015 (11.1 billion KRW) and about 72% of approximately 18.2 billion KRW in 2016 (13 billion KRW).

Earlier, in May of last year, the Fair Trade Commission judged that the golf course and hotel usage transactions by these two companies violated the Fair Trade Act, issuing corrective orders and imposing fines of 640 million KRW on Mirae Asset Global Investments and 557 million KRW on Mirae Asset Life Insurance.

Subsequently, in July of this year, the Minister of SMEs and Startups exercised the right to request prosecution only for the golf course usage transactions of these companies, leading the Fair Trade Commission to file charges against the two companies with the prosecution in August.

The prosecution stated, "This is the first case of applying Article 23-2, Paragraph 1, Subparagraph 4 of the Fair Trade Act alone to regulate transactions of considerable scale with the chairman's family’s company without reasonable consideration or comparison with other businesses."

However, the prosecution explained the background for not requesting a formal trial through a public trial, considering comprehensively that Mirae Asset Global Investments has since established and operated a 'Fair Trade Compliance Program,' Mirae Asset Life Insurance has established and operated 'Group Affiliate Transaction Guidelines,' and that the supported entity Mirae Asset Consulting did not actively gain profits due to operating losses.

A Mirae Asset representative stated, "This is a case where the Ministry of SMEs and Startups requested prosecution after the Fair Trade Commission decided not to pursue criminal charges," adding, "We regret that the prosecution decided to request a summary order."

They further added, "We will review response measures once the court issues the summary order in the future."

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