"Japanese Company Intentionally Liquidates Domestic Losses and Escapes... Suspected Hyundai Motor Public Offering Fraud"

[Asia Economy Reporter Ji Yeon-jin] Allegations of a 'eat-and-run' have been raised that a Japanese subsidiary supplying automotive wipers to Hyundai Motor and Kia received over 20 billion KRW in foreign investment benefits in Korea and then was liquidated with 'intentional losses.' There are also claims that during the liquidation process, there was collusion with Hyundai Motor to prepare for a labor union strike.

On the 20th, Woo Won-sik, a member of the National Assembly Environment and Labor Committee from the Democratic Party, analyzed the financial structure of Korea Wiper, a Korean subsidiary of the Japanese auto parts company Denso, and claimed that Korea Wiper deliberately deteriorated its finances by setting transaction prices within the group lower than the manufacturing cost.

Denso, an auto parts company established in 1949 with the Toyota Group as its parent company, supplies wipers to Hyundai Motor and Kia through its Korean affiliates Denso Korea and Denso Wiper System, and established Korea Wiper in 1987. Korea Wiper, whose shares are held by Denso Wiper System (61.75%) and Denso Corporation (38.25%), announced its liquidation last July.

Rep. Woo explained, "Regarding the profits generated from the decrease in purchase amounts by Denso Korea due to the low sales price of Korea Wiper, Denso Korea paid royalties exceeding 30 billion KRW annually to Denso Corporation. The book value (acquisition cost) of the land currently held is 2 billion KRW, while the publicly announced land price is 8 billion KRW, so a considerable capital gain can be expected upon actual liquidation."

He pointed out, "According to multiple accountants commissioned by the office, Korea Wiper remitted all profits to Japanese Denso, resulting in losses, so it is necessary to investigate whether this was for the purpose of corporate tax evasion. Intentional losses can be seen as deliberately causing damage to Korea Wiper, which may also constitute breach of trust under criminal law."

According to confirmation by Rep. Woo through the Ministry of Trade, Industry and Energy and local governments where Denso-related companies are located, Japanese Denso's affiliates in Korea have received financial benefits amounting to 22 billion KRW since 2005 based on the Foreign Investment Promotion Act and local ordinances, including rent and local tax reductions and support for land purchase loans.

Rep. Woo stated, "Illegal replacement production to prepare for strikes between Hyundai Motor, Denso Korea, and Korea Wiper, confirmed through internal documents, is currently being carried out in a scenario similar to the present one." He added, "At a dispatched factory located in Gyeongnam related to Denso Korea, automotive wiper production and assembly are being conducted using raw materials brought in from Japanese Denso's overseas factories." This has been pointed out as illegal replacement production prohibited under labor relations laws.

He emphasized, "This is an issue that requires thorough fact-finding by summoning the responsible persons of Hyundai Motor, Denso Korea, and Korea Wiper during the national audit."

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