Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
FTC fines Chey over SK Siltron acquisition case
Yook Sung-kwon, head of the Fair Trade Commission's (FTC) business group department, delivers briefing on the FTC's decision to fine SK Group Chairman Chey Tae-won and SK Inc. for an alleged sweetheart deal involving SK Siltron, at the government complex in Sejong. Wednesday. Yonhap
By Yi Whan-woo
Antitrust regulator criticized for slap-on-the-wrist punishment
By Yi Whan-woo
SK Group Chairman Chey Tae-won and SK Inc., the conglomerate's holding company, were slapped with a combined 1.6 billion won ($1.34 million) fine by the Fair Trade Commission (FTC), Wednesday, for an alleged sweetheart deal involving SK Siltron.
The chairman has been accused of making personal gains during the group's 2017 buyout of wafer manufacturer LG Siltron, now SK Siltron. The deal was led by SK Inc., which spearheads the conglomerate's efforts to foster new growth engines.
This is the first time a chaebol leader is being punished by the country's top antitrust regulator for allegedly taking advantage of a business opportunity as a controlling shareholder to make personal gains.
The punishment concludes the FTC's investigation that began in 2018 that was triggered by a request from a civic group.
The civic group, Solidarity for Economic Reform, raised suspicions in November 2017 that SK Holdings, now called SK Inc, allowed Chey to profit illicitly from the LG Siltron buyout.
SK Holdings purchased a 51 percent stake in the silicon wafer manufacturing arm of LG Group in 2017.
Instead of buying other 49 percent stake to gain full control over LG Siltron, SK Holdings then purchased only a 19.6 percent stake, while the remaining 29.4 percent was purchased by Chey.
The FTC suspected the conglomerate favored its chairman by giving away its opportunity to purchase all of the stocks, after judging the valuation of LG Siltron will rapidly rise in the coming years.
SK Group has denied the allegation, saying that there was nothing illegal about its chairman's bid for LG Siltron.
The group argued Chey took part in the bid as some overseas investors had moved to buy the stake in the wafer manufacturing company.
The measure, however, is seen as slap on the wrist, as the FTC decided not to lodge a complaint with the prosecution. The amount of the fine is also considered to be extremely low. Chey's net worth is estimated at 3.6 trillion won.
SK Group said it finds the FTC's action “regretful” and “unconvincing,” and that it will take all necessary measures.
SK Group Chairman Chey Tae-won enters the government complex in Sejong, Dec. 15, to join a full-member session of the Fair Trade Commission (FTC) concerning an allegedly illicit deal between him and SK Inc. involving SK Siltron. Korea Times file
“The profit made by Chairman Chey should originally belong to SK Inc. if they followed the relevant procedure in a fair manner,” Yook Sung-kwon, head of the FTC's business group department, said during a press briefing at the government complex in Sejong.
He added that the case was believed to be made possible with a controlling shareholder having an “absolute grip” and “access to inside information” over a targeted company.
“FTC therefore orders Chey and SK Inc. to take corrective steps and impose each with 800 million won in fines,” Yook added.
Asked why the antitrust watchdog will not file a complaint with the prosecution, Yoon explained the level of breaching the law on fair business practice was “not grave by nature.”
“We also took into account that there was no legal precedent and that it is hard to rule that such a breach was purely intentional,” he said.
Chey was apparently eager to defend himself, attending a full-nine member session of the FTC commissioners, Dec. 15, to decide whether punitive action should be taken.
It is unusual for the head of a company to attend a meeting in person as the watchdog does not require the person involved to be present.
In a statement, SK said, “We find it regretful that such an unconvincing decision was made even after we faithfully clarified surrounding suspicions.”
“We will thoroughly go over details and take all necessary measures, once we're officially notified of the FTC's measure,” it said.