Chair Chung Mong-gyu HDC Holdings Co., who was sent to trial on charges of omitting 20 relatives' companies that the Korea Fair Trade Commission judged to be affiliates of HDC Holdings Co. from materials for business group designation, fully denied the charges at the first hearing. Chung's side argued there was no fact of holding equity in or controlling the businesses of those companies, and that in many cases he did not even know their names, so there was no awareness of submitting false materials.
On Sep. 4, Judge Lee Hwan-gi of the Seoul Central District Court's Criminal Division 26 held the first trial for Chung, who was indicted on charges of violating the Monopoly Regulation and Fair Trade Act.
Chung's attorney said, "We cannot acknowledge the charges. The companies listed in the indictment are not controlled by the defendant," and added, "For most of the companies, the defendant does not even know the names, and they are operated independently of the defendant."
◇"No equity at all… the Korea Fair Trade Commission's business group interpretation is wrong"
Chung's side argued that beyond the facts, there are also problems with how the Korea Fair Trade Commission (FTC) interprets the scope of "business group" under the Fair Trade Act.
Under the Fair Trade Act, the "same person" refers to the individual who in effect controls the business group and is commonly called the "owner." Chung's side argued that to apply the criteria for inclusion in a business group under the Enforcement Decree of the Fair Trade Act, the same person must have equity or substantive control over the company in question, but Chung holds no equity at all in the companies listed in the charges.
The attorney said it was a misinterpretation of the Enforcement Decree for the Korea Fair Trade Commission (FTC) to determine that Chung controlled the companies solely because "related persons of the same person," such as relatives, held equity. They also argued that in the FTC's practice, even if relatives hold equity in a company, it is excluded from the business group if the same person lacks control.
Chung's side also denied intent. The attorney said, "There was neither the thought nor the intention to submit false materials regarding companies that relatives operate independently of the defendant," and stated they would prove during trial that Chung did not know those companies and that, even if he had tried to submit materials, it would have been practically difficult to do so.
The court confirmed, asking whether Chung's side's arguments could be summarized as "the defendant holds no equity at all in the company and does not control it, so it cannot be viewed as a business group under the Fair Trade Act, and there was no awareness of submitting false materials."
Prosecutors, by contrast, believe that from 2021 to 2024, Chung submitted false materials to the Korea Fair Trade Commission (FTC) a total of four times by omitting affiliates identified as owned by family members when submitting materials for the designation of business groups subject to limits on cross-shareholding, among others.
According to the Korea Fair Trade Commission (FTC), the omitted companies numbered 17 in 2021, 19 in 2022, 19 in 2023, and 18 in 2024, totaling 20 when duplicates by year are excluded. Of these, 12, including SJG Holdings, were judged by the commission to be corporations controlled by the family of Honorary Chair Park Se-jong SJG Sejong(033530), Chung's maternal uncle, and the remaining 8, including Intrans Shipping, to be corporations controlled by his younger sister Chung Yoo-kyung and her husband, Kim Jong-yeop, CEO of Intrans Shipping.
◇Prosecution requests four witnesses… witness examination to begin Jan. 15 next year
In upcoming hearings, witness examinations are expected over whether Chung actually controlled those companies and whether he recognized that they were omitted from the designation materials.
Chung's side did not consent to using as evidence the written statements of four related persons submitted by prosecutors. In response, prosecutors said they would summon the four to court for direct examination. Chung's side is also considering applying to call about four additional witnesses to establish the facts.
The court will first examine prosecution witness Hwang Jeong-hye at 10 a.m. on Jan. 15 next year, and will set the schedule for the remaining witnesses afterward.
The Korea Fair Trade Commission (FTC) determined that after being designated the same person of the HDC Holdings Co. business group, Chung submitted false designation materials for up to 19 years. However, considering the statute of limitations, only conduct from 2021 to 2024 was included in the complaint.
Prosecutors summarily indicted Chung, asking for a fine without a formal trial, and the court issued a summary order of a 150 million won fine. Chung objected and requested a formal trial, leading to the first hearing being held that day.