Fair Trade Commission sanctions SK affiliates for illegal debt guarantees... Fine of 153 million KRW

SK affiliates that provided joint guarantees worth around 10 billion KRW between subsidiaries, violating the prohibition on debt guarantees, will face sanctions from the Fair Trade Commission.

On the 30th, the Fair Trade Commission announced that it would impose corrective orders and a fine of 153 million KRW on Place4 (formerly Kin & Partners), an SK Group affiliate, for unfair debt guarantee practices.

Kin & Partners was established in 2015 to manage the assets of Choi Ki-won, chairperson of the SK Happiness Foundation and younger sister of SK Group Chairman Choi Tae-won. Although an executive of SK Group’s non-profit entity was the sole shareholder and representative, Chairperson Choi exercised actual control over management. The company was later merged into Place4 in 2021.

[Image source=Yonhap News]

According to the Fair Trade Commission, from March 2016 to May 2017, before the merger, Kin & Partners provided joint guarantees for loans amounting to 10 to 12 billion KRW that Place4 had borrowed from banks for hotel construction.

The Fair Trade Commission determined that such actions violated the Fair Trade Act, which prohibits debt guarantees among domestic affiliates, and decided to impose sanctions.

SK previously filed a lawsuit claiming that Kin & Partners and Place4 were not SK Group affiliates, but the court ruled that considering the legislative intent of the relevant law, these companies should be regarded as SK subsidiaries.

The Fair Trade Commission pointed out, "Through the covert debt guarantees between the disguised affiliates Kin & Partners and Place4, the newly established corporation Place4 was able to smoothly proceed with the hotel construction project," adding, "This act significantly undermined the purpose and foundation of preventing economic power concentration."

It added, "We will continue to closely monitor debt guarantee activities among affiliates of large business groups and impose strict sanctions in case of legal violations."

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