Taekwang Group Significantly Strengthens Disciplinary Standards... Strict Punishment for Unfairness and Misconduct

Gwanghwamun Heungkuk Life Building headquarters. Photo by Taekwang Group

Taekwang Group announced on the 29th that it has newly established disciplinary standards for unfair and unethical conduct to ensure fair work processing and a just competitive environment for its employees. The group is also strengthening its audit capabilities by recruiting experts with extensive experience in investigating economic and corporate crimes. This move reflects the group's determination not to repeat past mistakes that caused serious reputational damage due to the failure to timely prevent and detect misconduct by executives and employees.

Standard Disciplinary Guidelines Distributed to All Affiliates

Recently, Taekwang Group prepared a standard disciplinary guideline detailing specific disciplinary criteria for employee misconduct and distributed it to all its affiliates. While some affiliates previously had general disciplinary standards within their reward and punishment regulations, this is the first time the group has created a standard guideline at the group level. In this new standard, disciplinary levels are subdivided according to the type of misconduct.

According to the disciplinary standards, serious disciplinary actions such as dismissal or demotion are imposed for embezzlement of funds, misuse of corporate cards, or intentionally causing financial damage to the company by creating unjust expenses. Similarly, unfair transactions with stakeholders such as partner companies or receiving money, entertainment, hospitality, or favors are subject to the same level of severe discipline. Employees who cause complaints or neglect complaint handling are also subject to disciplinary action.

Taekwang Group also revised the "Taekwang Family Code of Ethics" for the first time in five years, including a prohibition on unethical language and behavior under the category of maintaining dignity. Furthermore, to ensure fair transactions between affiliates and partner companies, all qualified companies are given the opportunity to participate. In addition, reporting to the ethics department is made mandatory if any violations of the code of ethics are recognized.

The group also established a standard internal audit regulation for the first time. To guarantee the independence of audits, the transfer of audit personnel is restricted, and if any serious illegal or improper matters are discovered during an audit, the legal office is required to request an investigation by judicial authorities.

Strengthening Internal Audits... Recruiting Experts in Economic and Corporate Investigations

Along with institutional improvements to strengthen internal audits, Taekwang Group is enhancing its audit capabilities by recruiting experts with extensive experience in economic and corporate crime investigations. Kang Seung-kwan, former head of the Economic Crime Special Investigation Unit at the Seoul Metropolitan Police Agency and with practical audit experience at large corporations, joined the group as the head of the audit office on the 1st. Experts with rich experience in economic and corporate investigations from the prosecution, police, and Financial Supervisory Service are also joining the audit offices of the group and its affiliates one after another.

Kim Woo-jin, a professor at Seoul National University who was appointed as an outside director of Taekwang Industrial on the 29th of last month upon the recommendation of the activist fund Truston, has also joined the audit committee of Taekwang Industrial, the group's core affiliate. He will oversee and direct the overall audit office operations. Professor Kim is an expert in corporate governance and compliance management and also serves as a member of Samsung's Compliance Committee. To strengthen the audit committee's function, Taekwang Industrial also added Ahn Hyo-sung, a managing director at Sejong Accounting Corporation and an outside director recommended by Truston, expanding the number of audit committee members from three to four.

The reason Taekwang Group is strengthening its internal audit functions is largely due to the revelation of misconduct by former management officials, including Kim Ki-yoo, former chairman of the Management Council, who oversaw group management during the absence of former chairman Lee Ho-jin. As a result of an audit conducted last year involving a law firm across all affiliates, it was found that former chairman Kim pressured a Taekwang Group-affiliated savings bank to lend 15 billion KRW to a company associated with his acquaintance. There was also evidence of inflated construction costs for Taekwang Industrial and Taekwang CC being funneled to an acquaintance's company. These cases are currently under investigation by the prosecution.

A Taekwang Group official stated, "Former chairman Kim effectively neutralized the internal audit function to conceal his misconduct. This measure focuses on establishing institutional devices and securing professional personnel so that the audit organization can maintain independence and objectively monitor internal fraud and corruption."

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