SEOUL– South Korea’s antitrust regulator said Wednesday it has decided to fine SK Holdings Co. and group chief Chey Tae-won a combined 1.6 billion won (US$1.3 million) on allegations that he unfairly received huge profits from the company’s 2017 business deal.
The Fair Trade Commission (FTC) has been investigating allegations that SK Holdings, SK Group’s holding company, deliberately helped Chey gain undue profits in the process of its purchase of LG Siltron Co., a producer of wafers used in chip manufacturing.
In January 2017, SK Holdings bought a 51 percent stake in LG Siltron from LG Group for 18,138 won per share. The holding company purchased another 19.6 percent stake in LG Siltron, which was later renamed SK Siltron Co., for 12,871 won per share in April that year.
The FTC said SK Holdings “directly and indirectly” allowed Chey to acquire a 29.4 percent stake in LG Siltron from creditor banks in August 2017 even though SK Holdings could have bought the remaining stake at about 30 percent cheaper as the stake did not have a management premium.
The regulator said SK was effectively excluded from a business opportunity and Chey reaped “undue” profits in the process.
Under the fair trade act, large business groups with assets exceeding 5 trillion won are banned from giving undue profits to their chiefs by providing lucrative business opportunities.
The commission ordered SK Holdings and Chey to take corrective steps and decided to impose a tentative fine of 800 million won on each of them. But it did not lodge a complaint with the prosecution against the case.
The punitive action came a week after Chey made a rare appearance at a deliberation session by the FTC over the case.
SK has claimed it was “uncertain” then that Chey could reap massive profits with his stake purchase. It also said it did not need to hold stakes exceeding 70.6 percent in LG Siltron and generated profits by making other investments and takeovers.
Source: Yonhap News Agency