The Fair Trade Commission announced on the 6th that it has decided to file a complaint against Shin Dong-won, chairman of Nongshim, for allegedly submitting false information regarding the status of affiliated companies that must be submitted.
According to the Fair Trade Commission, Chairman Shin omitted a total of 39 companies, including 10 affiliate companies and 29 executive companies, from the status of affiliated companies while submitting materials for designation as a publicly disclosed corporate group from 2021 to 2023.
The total asset amount of the companies not submitted by Chairman Shin was approximately 93.8 billion won. The total assets of Nongshim submitted without these companies' information amounted to 4.9339 trillion won. By not submitting the relevant company data, Nongshim was excluded from the list of publicly disclosed corporate groups (with total assets of over 5 trillion won) in 2021.
As a result, Nongshim and its affiliates were completely exempt from the application of policies for large corporate groups, such as prohibitions on unfair provision of benefits to related parties and disclosure obligations. Furthermore, some of the omitted companies were recognized as small and medium enterprises and received tax benefits under the Corporate Tax Act and the Tax Special Treatment Restriction Act.
The companies that were not submitted during the 2021 designation included nine affiliated companies, such as "Jeonil Grinding," in which Shin's maternal uncles held shares and participated in management. In 2022, the existing nine companies were joined by BL International, bringing the total to 10 omitted companies. Additionally, 29 companies associated with executives working in the omitted affiliated companies were also excluded from the submission of designated materials.
The Fair Trade Commission pointed out that the omitted affiliated companies, such as Jeonil Grinding, were linked to affiliated companies with significant transaction volumes with Nongshim, and their existence could be sufficiently identified through affiliated company audit reports.
Considering that Shin Dong-won's maternal uncles attended the funeral of late chairman Shin Chun-ho and the wedding of Chairman Shin's daughter, it has been confirmed that familial relationships are being maintained. It has been learned that some executive companies recognized internally that they fell under the category of affiliated company incorporation during the 2023 submission process for designated materials, yet they did not report the affiliation until the Fair Trade Commission's onsite investigation in July 2023.
It was reported that Chairman Shin's side claimed during the Fair Trade Commission investigation that he had no obligation to submit the designated materials because he did not receive notification of a change of the same individual after the death of the former chairman in March 2021. In response, the Fair Trade Commission concluded that "the responsibility for submitting the designated materials lies with Shin Dong-won, who has effectively succeeded the position of the existing same individual, even before the notification of same individual designation or change."
A Fair Trade Commission official stated, "The designation system for publicly disclosed corporate groups is the foundation of measures to curb economic power concentration," adding, "We will continue monitoring to ensure accurate submissions of designated materials, and if any violations are detected, we plan to impose stringent sanctions."
A spokesperson for Nongshim said, "This issue arose from past misunderstandings of the person in charge," and added, "Preventive measures have been completed, and there are currently no issues. We will clarify our position well if a criminal investigation proceeds in the future."