Fair Trade Commission Files Complaint Against Hoban Construction Chairman for "Submitting False Data for Large Business Group Designation"

Omission of 13 Affiliates of Chairman Ji Jeong-ja's Family in Designated Documents... Concealment of 2 Relatives
Fair Trade Commission: "Chairman Kim's Awareness Highly Likely... Attempts to Conceal Data Also Found"

Kim Sang-yeol, Chairman of Hoban Construction.
Photo by Asia Economy DB

[Asia Economy Sejong=Reporter Lee Jun-hyung] The Korea Fair Trade Commission (KFTC) has filed charges against Kim Sang-yeol, chairman of Hoban Construction, for submitting false data regarding the designation of large business groups.

The KFTC announced on the 17th that Kim Sang-yeol, the same person in charge (head) of Hoban Construction, was reported for omitting 13 companies owned by relatives and 2 relatives themselves during the submission process of the large business group designation data.

The KFTC believes that Chairman Kim was highly likely aware of the legal violation, as he submitted false designation data four times from 2017 to 2020. Considering the seriousness of the violation and attempts to conceal data, the KFTC judged that the case met the criteria for prosecution under the "Guidelines for Prosecution of Violations Related to Reporting and Data Submission by Business Groups."

Previously, in 2017, Chairman Kim submitted designation data to the KFTC omitting nine affiliates including Cheongyeon Investment. Cheongyeon Investment is a company controlled by the son-in-law of Kim’s brother-in-law, who is the second-largest individual shareholder of Hoban Construction. The KFTC found that Chairman Kim could have easily identified these affiliates based on shareholding ratios of his brother-in-law and others but intentionally omitted some affiliates such as Cheongyeon Investment when submitting the designation data.

Hoban Construction headquarters located in Seocho-gu, Seoul.
Photo by Asia Economy DB

Additionally, two affiliates including Samin Enterprise were omitted from the designation data submitted by Chairman Kim to the KFTC from 2019 to 2020. Samin Enterprise is a company wholly owned by the son of Kim’s spouse’s maternal uncle. According to the KFTC, Chairman Kim was already aware of his spouse’s maternal uncle and son, and even employees of the affiliate recognized Samin Enterprise as a relative company of Hoban Construction.

Hoban Construction also funneled work orders to Samin Enterprise. Although Samin Enterprise did not meet the requirements for registration as a Hoban Construction partner, such as credit rating, it began transactions with Hoban Construction from July 2020. The company transferred shares held by relatives to others for the purpose of doing business with Hoban Construction. Subsequently, Hoban Construction redirected orders from existing suppliers who had received excellent partner awards for three years to Samin Enterprise without prior notice. Samin Enterprise, with a capital of 5 million KRW, recorded sales of approximately 1.8 billion KRW within about six months after starting transactions with Hoban Construction. Transactions with Hoban Construction accounted for 88.2% of its sales.

Status of false submissions of data for designation as a large business group by Hoban Construction.
[Photo by Korea Fair Trade Commission]

That is not all. Three affiliates omitted from the designation data?Segi Sangsa, Yeongam Mart Unnam Branch, and Yeollin Development?are companies in which Kim’s son-in-law, younger sister, and brother-in-law hold 31% to 100% of shares. Notably, in 2018, despite multiple reports from Hoban Construction about the necessity to include Segi Sangsa as an affiliate, Chairman Kim submitted designation data omitting the company. After recognizing the omission, he deliberately concealed it by submitting the affiliate inclusion report without recording his daughter’s marriage registration date.

Chairman Kim also omitted two relatives, his son-in-law and brother-in-law, from the relative status data. When submitting designation data to the KFTC, it is mandatory to list relatives within six degrees of consanguinity and five degrees of affinity of the head of the group.

The KFTC plans to thoroughly investigate omissions of affiliates and relatives by other large business groups and take strict action upon detection.

A KFTC official stated, “This action is a case where the ‘prosecution guidelines’ were applied to prosecute the intentional submission of false designation data by a large business group. Strict sanctions on omissions of affiliates and relatives will serve as a warning to raise awareness.”

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