[THE INVESTOR] SK Group, the nation’s fourth-largest conglomerate, topped the list of 20 conglomerates in terms of trading volume among their affiliates, according to Chaebul.com, a conglomerate-tracking research firm, on Aug. 10.

The combined internal trading among SK companies was 33.3 trillion won (US$30 billion) last year, with 24 affiliates earning more than half of their revenue from transactions with sister firms. 

Other chaebol groups with large inter-unit trading included Hyundai Motor (30.9 trillion won), Samsung (19.6 trillion won), LG (16.8 trillion won) and POSCO (11.5 trillion won).

Inter-subsidiary trading among big family-run conglomerates is not illegal here but is under strict regulatory surveillance as some subsidiaries, in which the owner family holds large stakes, use it to raise their revenue and stock prices.

The government imposes a fine of less than 200 million won or a jail term of more than three years when a subsidiary with the owner family’s shareholding exceeding 30 percent sees more than 20 billion won or 12 percent of its total revenue from transactions with other sister firms.

Last year, some LG affiliates depended on inter-subsidiary deals for their entire revenue, while Samsung SDS, the group’s system integration unit, earned more than 3 trillion won, about 73.2 percent of its total revenue from inter-unit trading.

By Lee Ji-yoon (jylee@heraldcorp.com)