KT-Hyundai Motor 'Boeun Investment Suspicion' Investigation, the Link is 'Main Client'

Prosecutors Expanding Investigation Net to Hyundai Motor Company

The prosecution, investigating the 'reciprocal investment suspicion' between KT and Hyundai Motor Group, is expanding its investigation net toward Hyundai Motor Group. The link connecting KT and Hyundai Motor is Hyundai AutoEver, considered the main client of Spark & Associates (Spark, now Open Cloud Lab).

[Photo by Beopryul Newspaper]

On the 20th, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Yong Seong-jin) conducted raids at four locations, including the residence of Seo Jeong-sik, CEO of Hyundai AutoEver, and residences of Spark officials.

A prosecution official stated, "The raids are related to allegations of violation of the Act on the Aggravated Punishment of Specific Economic Crimes (breach of trust), concerning KT Cloud's unfairly high-priced acquisition of Spark."

The prosecution reportedly launched a forced investigation into the CEO of Hyundai AutoEver, Spark's main client, to scrutinize Spark's sales status amid suspicions of overpriced purchases.

Hyundai AutoEver is a mobility software company affiliated with Hyundai Motor Group. Spark, a vehicle cloud company, reportedly supplied most of its volume to Hyundai AutoEver. In effect, Hyundai AutoEver is Spark's sole client. The former KT Transformation Division Head (President), who was a final candidate for the next KT CEO but resigned, the CEO of KT Cloud, Park, the founder of Spark, and the CEO of Hyundai AutoEver are all acquaintances.

The shareholders of Hyundai AutoEver include Hyundai Motor, Hyundai Mobis, and Hyundai Motor Chairman Chung Eui-sun. According to the quarterly report, as of the 14th of this month, Hyundai Motor is the largest shareholder of Hyundai AutoEver, holding 31.59% of the total shares. Following are Hyundai Mobis with 20.13%, Kia with 16.24%, Hyundai Motor Chairman Chung Eui-sun with 7.33%, and Seo Jeong-sik, CEO of Hyundai AutoEver, with 0.01%. Chairman Chung holds 2.65% of Hyundai Motor shares.

[Photo by Yonhap News]

The timing of the investments between the two companies, known as the reciprocal investment suspicion, dates back to 2019. Hyundai Motor purchased shares of Airplug twice in 2019 and 2021 for a total of 28.1 billion KRW. Airplug was established in June 2010 by Koo Jun-mo, the elder brother of former KT CEO Ku Hyeon-mo. One year later, KT's subsidiary KT Cloud acquired Spark, paying 20.7 billion KRW. Spark was founded in 2005 by Park Mo, the brother-in-law of Hyundai Motor Chairman Chung Eui-sun. The prosecution believes that during the repeated investments at inflated amounts, the management committed crimes such as breach of trust by creating slush funds.

The prosecution has been conducting a two-pronged investigation into Spark and Airplug regarding the reciprocal investment suspicion. In August, the investigation into Spark gained momentum when the prosecution raided accounting firm A, which conducted a corporate valuation of Spark. The prosecution views the valuation of Spark at around 20 billion KRW by accounting firm A as inappropriate.

Soo-jung Hong, Reporter, Legal Times

※This article is based on content supplied by Law Times.

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