Prosecutors Conduct Search and Seizure at SPC Group for 'Unfair Support to Affiliates and Breach of Fiduciary Duty' (Comprehensive)

The Taegeukgi and the Prosecutor's Office flag hanging at the Seoul Central District Prosecutors' Office in Seocho-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporter Kim Hyung-min] The prosecution has launched a forced investigation into SPC Group, which is suspected of 'preferential treatment in business transactions' and 'unfair succession.'

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Jung-seop) sent prosecutors and investigators to SPC Group's headquarters and affiliated company offices on the morning of the 8th to secure materials related to allegations of breach of trust by SPC Group's management.

The prosecution is investigating allegations that SPC affiliates unfairly supported SPC Samlip from April 2011 to April 2019, funneling 41.4 billion KRW in profits. Specifically, it was found that from September 2013 to July 2018, three bakery affiliates including Paris Croissant made purchases of products from eight production affiliates such as Mildawon through Samlip, thereby channeling 'pass-through fees.' Samlip, without any substantial role, bought flour from production affiliates at 740 KRW and sold it to bakery affiliates at 779 KRW, thus securing profits.

Shany signed a contract in April 2011 to provide trademark rights to Samlip free of charge for eight years. The sales network was also transferred at 2.85 billion KRW, which is lower than the normal price of 4.06 billion KRW.

Paris Croissant and Shany also transferred their shares in Mildawon to Samlip in December 2012 at 255 KRW per share, significantly lower than the normal price of 404 KRW per share. Through this, it was revealed that Samlip received a total support of 2 billion KRW. Since Mildawon’s production volume and stock price were expected to rise, Paris Croissant is estimated to have incurred a sale loss of 7.6 billion KRW, and Shany 3.7 billion KRW.

In connection with this, SPC Group Chairman Huh Young-in and other family members have been placed under investigation for breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. The Fair Trade Commission imposed corrective orders and a fine of 64.7 billion KRW on SPC Group and reported Chairman Huh, former Group President Cho Sang-ho, Paris Croissant CEO Hwang Jae-bok, and affiliated corporations to the prosecution.

Since the investigation team was replaced in May, the prosecution has been conducting preparatory work such as witness interviews. Last month, CEO Hwang Jae-bok was summoned and questioned as a suspect.

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