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Conglomerates under tougher probe by tax, anti-trust agencies
By Kim Yon-sePublished : May 24, 2012 - 19:37
The conglomerate sector has been a key investigation target of the National Tax Service and the Fair Trade Commission as the political power of the incumbent administration has weakened.
The prosecution is also investigating some conglomerates’ business units for irregular practices.
Over the past few months, the investigative authorities have been widening the scope of inquiries into several units of major business groups for alleged practices like tax evasion, embezzlement and price-fixing.
Conglomerates had enjoyed a favorable investment environment thanks to the “business-friendly” policy of the Lee Myung-bak administration, a research analyst said.
“But now they are alert over the possible revelation of their misdeeds amid the President’s lame duck status,” he said.
Samsung Electronics units that have been under a tax probe of the NTS included Samsung Electronics, Samsung Engineering and Samsung SDI.
The NTS recently slapped 470 billion won ($420 million) in back taxes and fines on Samsung Electronics for evading taxes in its trading of overseas operations.
LG Electronics has also been under a tax probe and LG Display was hit with a raid by the prosecution as its core technologies were leaked.
In March, the FTC fined Samsung Electronics and two of its executive officers a combined 400 million won for hindering an investigation by antitrust regulators. The fines marked the highest-ever amount imposed for such an offense.
The FTC has also imposed 5.08 billion won in fines on SK Group for violating a law banning a holding company from possessing a financial unit. Under the current antitrust law, a holding company with 100 billion won or more in assets is not allowed to own a financial affiliate.
When SK turned into a holding company in March 2007, the group’s trading arm SK Networks should have dumped its 22.7 percent share of SK Securities, its “daughter company.”
More recently, the antitrust regulator fined Samsung Electronics 1.6 billion won for irregular practices in its transactions with subcontractors.
During the fourth quarter of 2011, prosecutors raided the head office of SK Group, widening their investigation into suspicions surrounding catastrophic financial investments made by its chairman Chey Tae-won.
Investigators from the Seoul Central District Prosecutors’ Office descended upon the group’s headquarters in central Seoul early in the morning to search for evidence.
The raid concurrently took place in 10 locations, including the office of SK Holdings, the group’s de facto holding company controlled by the group’s founding family, the Cheys.
Among them is SK Gas Co., the country’s biggest distributor of liquefied petroleum gas, located in central Seoul.
Analysts are raising the possibility that more units of other conglomerates including Hanwha and POSCO could be the target of the investigative agencies.
By Kim Yon-se (kys@heraldcorp.com)
The prosecution is also investigating some conglomerates’ business units for irregular practices.
Over the past few months, the investigative authorities have been widening the scope of inquiries into several units of major business groups for alleged practices like tax evasion, embezzlement and price-fixing.
Conglomerates had enjoyed a favorable investment environment thanks to the “business-friendly” policy of the Lee Myung-bak administration, a research analyst said.
“But now they are alert over the possible revelation of their misdeeds amid the President’s lame duck status,” he said.
Samsung Electronics units that have been under a tax probe of the NTS included Samsung Electronics, Samsung Engineering and Samsung SDI.
The NTS recently slapped 470 billion won ($420 million) in back taxes and fines on Samsung Electronics for evading taxes in its trading of overseas operations.
LG Electronics has also been under a tax probe and LG Display was hit with a raid by the prosecution as its core technologies were leaked.
In March, the FTC fined Samsung Electronics and two of its executive officers a combined 400 million won for hindering an investigation by antitrust regulators. The fines marked the highest-ever amount imposed for such an offense.
The FTC has also imposed 5.08 billion won in fines on SK Group for violating a law banning a holding company from possessing a financial unit. Under the current antitrust law, a holding company with 100 billion won or more in assets is not allowed to own a financial affiliate.
When SK turned into a holding company in March 2007, the group’s trading arm SK Networks should have dumped its 22.7 percent share of SK Securities, its “daughter company.”
More recently, the antitrust regulator fined Samsung Electronics 1.6 billion won for irregular practices in its transactions with subcontractors.
During the fourth quarter of 2011, prosecutors raided the head office of SK Group, widening their investigation into suspicions surrounding catastrophic financial investments made by its chairman Chey Tae-won.
Investigators from the Seoul Central District Prosecutors’ Office descended upon the group’s headquarters in central Seoul early in the morning to search for evidence.
The raid concurrently took place in 10 locations, including the office of SK Holdings, the group’s de facto holding company controlled by the group’s founding family, the Cheys.
Among them is SK Gas Co., the country’s biggest distributor of liquefied petroleum gas, located in central Seoul.
Analysts are raising the possibility that more units of other conglomerates including Hanwha and POSCO could be the target of the investigative agencies.
By Kim Yon-se (kys@heraldcorp.com)
