Hoban fined $47 million for illegally assisting chairman's sons
Hoban Construction Chairman Kim Sang-yeol, left, and his oldest son, Kim Dae-heon, the building developer's president of planning / Korea Times files
By Park Jae-hyuk
The Fair Trade Commission (FTC) imposed a 60.8 billion won fine ($47 million) on Hoban Construction, Thursday, for alleged cross-subsidiary dealings to assist companies owned by Chairman Kim Sang-yeol's two sons.
The size of the fine is the third largest among those the antitrust regulator has imposed, following a 234.9 billion won fine imposed on Samsung Welstory in 2021 and a 63.7 billion won fine imposed on SPC in 2020.
Between 2013 and 2015, Hoban Construction established multiple affiliates to win bids to build houses on government-owned land, according to the FTC.
After winning the bids, the building developer handed over its rights to companies owned by the chairman's oldest son, Kim Dae-heon, and the second-oldest son, Kim Min-sung. As a result, the companies owned by the two sons were able to collectively make 1.3 trillion won worth of profits.
In addition, Hoban Construction offered billions of won to those companies to let them participate in the government's housing construction projects. The building developer also guaranteed the repayment of 2.6 trillion won for the projects to develop the government-owned land, while allowing them to conduct 93.6 billion won worth of construction.
The FTC pointed out that the companies owned by the chairman's sons were able to grow rapidly based on illegal cross-subsidiary deals. The chairman's oldest son was also able to succeed his father by acquiring a 54.7 percent stake in Hoban Construction, when the building developer merged with the son's company in 2018.
“The Hoban chairman's family members used the government's public housing policy to transfer their wealth illegally,” an FTC official said.
The antitrust watchdog, however, decided not to refer the building developer to the prosecutors, as the five-year statute of limitations had passed.
In response, Hoban Construction said it was regrettable that the FTC did not accept its claim.
“We will take follow-up measures after reviewing the FTC's decision,” the building developer said in a statement.