Kim Joon-ki (82), the founding chair and head (same person) of DB Group, was reported to prosecutors on suspicion of submitting false affiliate data to the Korea Fair Trade Commission.
The Korea Fair Trade Commission (FTC) designates large business groups each year based on affiliate data submitted by corporations. The Korea Fair Trade Commission (FTC) determined that DB used disguised affiliates it had concealed for a long period to maintain the controlling family's grip on power and for private gain.
The Korea Fair Trade Commission (FTC) announced on the 8th that it confirmed that Founder Chair Kim omitted two foundations—Donggok Social Welfare Foundation and Donggok Forest Culture Foundation—and 15 companies, including Samdong Heungsang, Biltek, Neuron Engineering, Topserve, Comeland (formerly Samdong Land), Sangnok Steel, Pyeongchang City Bus, Gangwon Heungeop, Gangwon Ilbo, Gangwon Passenger Automobile, Donggu Farm, Yangyang City Bus, Daeji Farming, Dongcheol Packaging, and Gumi Resources, from entities belonging to DB.
According to the Korea Fair Trade Commission (FTC) investigation, DB has used the Donggok Social Welfare Foundation, which was excluded from the group in 1999, and its subsidiaries since at least 2010 to maintain the controlling family's power and for private gain.
In particular, these disguised affiliates were repeatedly mobilized to raise funds for and defend control over key affiliates such as DB HiTek and DB INC. For example, in 2010, to improve DB HiTek's finances, the foundation companies took out large loans from DB Capital and bought real estate held by DB HiTek even though it was not needed.
Signs of pursuing private interests for Chair Kim personally were also detected. In 2021, when Chair Kim needed personal funds, Kim borrowed 22 billion won from Biltek, a disguised affiliate. At the time, Biltek had 37.1 billion won in cash after selling real estate to DB HiTek. In effect, affiliate funds flowed to the owner personally. In 2022, to maintain Kim's control over the group, disguised affiliates Biltek and Samdong Heungsan also acquired 1.1% equity in DB HiTek on Kim's behalf.
Accordingly, the Korea Fair Trade Commission (FTC) reported Founder Chair Kim to prosecutors on suspicion of violating the Monopoly Regulation and Fair Trade Act. The law stipulates that submitting false materials for the designation of business groups subject to restrictions on mutual investment and others is punishable by up to two years in prison or a fine of up to 15 million won. It has been six months since the Korea Fair Trade Commission (FTC) reported an owner for submitting false data, after Nongshim Chair Shin Dong-won in Aug. last year.
Um Jandi, head of the corporate group management division at the Korea Fair Trade Commission (FTC), said, "DB's sole concern was maintaining and expanding the controlling family's power and pursuing private interests, and the foundation companies were nothing more than tools, as was laid bare," and added, "High-level appointments and defense of management control are matters the same person directly decides or approves, making it impossible to plan and execute them without the owner's knowledge."
The Korea Fair Trade Commission (FTC) retroactively incorporated the 15 entities caught this time as affiliates of DB Group. The Korea Fair Trade Commission (FTC) plans to continue strengthening monitoring of false submissions of designation materials, including operating disguised affiliates in large business groups.
A DB Group official said, "We regret the Korea Fair Trade Commission (FTC) decision," and added, "We will present the company's position as fully as possible during the prosecutorial investigation."