Nearly one out of every three subsidiaries of large conglomerates here depend on intragroup transactions for a greater part of their overall sales, a report showed Wednesday, indicating many firms and their owners may be engaged in inappropriate, if not unlawful, means to boost their personal wealth.

According to the report from market research firm Chaebul.com, 261 or 28.2 percent of 926 companies affiliated with the country's top 20 conglomerates had more than 50 percent of their sales come from other subsidiaries in 2015.


Intragroup transactions refer to transactions between or among subsidiaries that are part of the same business group.

Not all inter-subsidiary dealings are unlawful, but certain cases are prohibited under the antitrust law as such practices can and are often used to boost the value of smaller affiliates or even paper companies set up and owned by group owners or their family members.

The report showed LG Group, the parent company of LG Electronics, had the largest portion of its subsidiaries overly depending on intragroup trade. Inter-subsidiary dealings accounted for more than 50 percent of sales at 33 out of the total 67 subsidiaries last year.

Communications giant KT also had 42.5 percent, or 17, of its 40 subsidiaries depending on intragroup transactions as a major source of income, while the ratio for leading automotive firm Hyundai Motor Group stood at 39.2 percent.

By amount, SK Group, the parent firm of mobile communications service giant SK Telecom, had the largest amount at 33.3 trillion won ($30.26 billion) in sales generated through intragroup dealings, followed by Hyundai Motor Group with 30.9 trillion won and Samsung Group 19.6 trillion won.

In total, the top 20 conglomerates and their subsidiaries generated 149.2 trillion won in sales through intragroup trade, the report said. (Yonhap)