[The Architects]⑤After the Price-Fixing Scandal... Food Companies’ Boards Filled with Former Fair Trade and Tax Officials

Major food companies such as CJ, Daesang, and Orion are successively appointing former officials from regulatory agencies-including the Fair Trade Commission, National Tax Service, and Korea Customs Service-as outside directors ahead of this year's regular general shareholders' meetings. This is interpreted as a move to strengthen their response to fair trade regulations and tax risks following cases of price-fixing involving flour, sugar, and starch syrup.

According to the food industry and the Financial Supervisory Service’s electronic disclosure system on March 12, major food companies have nominated candidates with backgrounds in fair trade, taxation, and judicial fields as outside directors for their general meetings of shareholders this year. While outside directors in the food industry have traditionally been drawn mainly from academia, such as professors and accountants, there is now a growing trend to appoint individuals with experience in regulatory response to the boards.

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CJ is appointing Kim Jaeshin, the former Vice Chairman of the Fair Trade Commission, as a new outside director. Kim previously served as Director General of the Enterprise Group Bureau and the Competition Policy Bureau at the Fair Trade Commission before becoming Vice Chairman, making him a bureaucrat specializing in fair trade policy. He is currently serving as an advisor at Kim & Chang law firm.

Kim will join the board as the successor to Choi Jongku, the former Chairman of the Financial Services Commission, whose term ends this year. With this, CJ’s outside directors will comprise Lee Juyeol, former Governor of the Bank of Korea; Moon Heecheol, former Deputy Commissioner of the National Tax Service; Han Aera, Professor at Sungkyunkwan University Law School; and Kim Jaeshin. This means that the board will now include members with backgrounds in monetary policy, taxation, law, and fair trade, all of whom are former regulatory officials.

Daesang is also bringing in a fair trade expert as an outside director. Daesang has nominated Choi Mujin, former Director General of the Cartel Investigation Bureau at the Fair Trade Commission, as a candidate. Choi has held positions including Director General of the Cartel Investigation Bureau, Competition Policy Bureau, and Corporate Transaction Policy Bureau at the Fair Trade Commission.

At this general meeting of shareholders, Daesang will reappoint some existing outside directors and add new members. Choi Seongrak, former Deputy Commissioner of the Ministry of Food and Drug Safety, and Jang Ilhyeok, former Chief Judge of the Seoul Central District Court, will be reappointed. Choi Mujin and Ahn Heejun, Professor at Sungkyunkwan University, will be newly appointed. Accordingly, Daesang’s outside directors will consist of Choi Seongrak, former Deputy Commissioner of the Ministry of Food and Drug Safety; Jang Ilhyeok, former Chief Judge; Choi Mujin, former Director General of the Cartel Investigation Bureau at the Fair Trade Commission; and Ahn Heejun, Professor at Sungkyunkwan University. This structure adds expertise in fair trade and finance to the existing strengths in food regulation and law.

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Appointments in the taxation field are also notable. Orion plans to appoint Lee Hyungyu, former Commissioner of the Incheon Regional Tax Office, as an outside director. Lee previously served as Director of the Investigation Bureau II at the Busan Regional Tax Office, President of the National Tax Officials Training Institute, and Commissioner of the Incheon Regional Tax Office.

A tax policy expert is also joining as an outside director. Orion Holdings has nominated Im Jaehyun, former Commissioner of the Korea Customs Service, as a candidate. Im, who previously served as Director General of the Tax Policy Bureau at the Ministry of Economy and Finance, is currently an advisor at Bae, Kim & Lee LLC. CJ CheilJedang has also nominated Im as a candidate for outside director. As the food industry relies heavily on imports for key raw materials such as wheat and corn, it is highly affected by exchange rates, international grain prices, and tariff policies.

Individuals with judicial and legal backgrounds are also joining the boards. Nongshim plans to appoint Lee Seongho, former Chief Judge of the Seoul Central District Court, as an outside director. Samyang Corporation has nominated Oh Inseo, former Chief Prosecutor of the Suwon High Prosecutors’ Office, as a candidate, while Samyang Foods plans to appoint a lawyer from Kim & Chang as an outside director. Ottogi and SPC Samlip are appointing accounting experts as outside directors.

Industry observers note that the composition of outside directors at food companies is now reflecting recent changes in the regulatory environment. While outside directors in the food industry were often professors or accountants, there is now a preference for individuals with experience in regulatory response, such as fair trade, taxation, and law.

A food industry official said, "Food companies face regulatory challenges in areas such as pricing policies, distribution structures, and raw material imports," adding, "There is a growing trend to strengthen risk management capabilities by appointing individuals with experience in fair trade and taxation."

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