Ghost Company Use for 'Child Succession of Management Rights', Famous Home Appliance Company CEO Caught

Illegal succession slush fund transactions as well. Provided by Korea Customs Service

[Asia Economy (Daejeon) Reporter Jeong Il-woong] The head of a well-known domestic home appliance company, who attempted to transfer company funds overseas by setting up a non-existent ghost company (paper company) and illegally transfer management rights to his children by gifting the ghost company, has been caught.

The Incheon Customs Office of the Korea Customs Service announced on the 12th that it had identified three individuals, including the CEO of domestic home appliance company A, on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes and the Foreign Exchange Transactions Act, and referred them to the prosecution.

According to Incheon Customs, the CEO of company A established a ghost company under his child's name in Hong Kong for the illegal purpose of management succession, then signed order contracts with domestic clients through the ghost company. He embezzled about 2.3 billion KRW of the 45 billion KRW in processing fees received from clients overseas to create slush funds.

In this process, the CEO of company A also showed meticulousness by having his child reside overseas for several years before the establishment of the ghost company in 2017, thus avoiding the scope of the Foreign Exchange Transactions Act.

Overseas factory sold at a low price transaction. Provided by Korea Customs Service

Additionally, to illegally transfer overseas factories worth approximately 22 billion KRW owned by company A to his child, the CEO established another ghost company in Hong Kong under an acquaintance's name, sold it at a low price (500 million KRW), and disguised the overseas factory sale proceeds received by the headquarters from the ghost company as import payments, remitting them to the ghost company under his child's name.

The CEO’s actions were carried out with the illegal intent to transfer management rights to his child, which was proven when Incheon Customs secured company A’s business plan (including the illegal succession plan) through foreign exchange inspections and search warrants.

The business plan was understood to have been prepared by the CEO’s child while operating a TF team within the headquarters from June to December 2018, and it reportedly included details about acquiring not only the overseas factories but also the headquarters itself using the illegally embezzled succession slush funds.

An official from Incheon Customs stated, “Customs will continue to crack down on import-export companies that abuse trade and foreign exchange transactions to obtain illegal criminal proceeds,” and added, “We will also do our best to prevent innocent victims from suffering due to such illegal activities.”

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