Haitai denies suspicions of inflating sales figures to boost share price

Haitai Confectionary & Foods headquarters in Seoul / Screenshot from the company's official website

By Lee Yeon-woo

Haitai Confectionary & Foods is suspected of inflating sales performance figures by billions of won between 2016 and 2017, raising suspicions that it manipulated information intentionally to jack up its stock price. The head office denied the suspicions, blaming “regional sales offices” for the irregularities.

According to industry sources, tax authorities found out last year that some of Haitai's sales offices issued abnormally large amounts of sales and tax statements to inflate their sales figures between 2016 and 2017 and offloaded the amount on wholesalers.

Local media reported, Monday, that a wholesaler received a notification from the tax agency last month that he will be taxed an additional 28 million won ($21,556) due to Haitai's action. He was told by the tax agency that a fraudulent transaction was spotted in the 2017 data and that additional taxes will be imposed as a result. Many other wholesalers dealing with Haitai are also facing similar taxes.

Haitai acknowledged that there were attempts to inflate sales among those related to the group.

“We confirmed that some regional sales offices went further with greed to reach their (sales) goals and issued excessive sales and tax statements,” the company said. “For the normalization of the wholesalers, we corrected the statements to match actual sales.”

However, it denied suspicions that the different sales figures were aimed at boosting the stock price before the company went public. Haitai Confectionary & Foods and Crown Haitai Holdings, its parent company, were listed on the main KOSPI in April 2016 and March 2017, respectively.

“It's not true that the headquarters systematically intervened to achieve certain aims in a certain period,” the company said. “The (increased sales) take up an extremely small part of the company's total sales. It does not have a direct relationship with the stock price and it's not the amount which can affect the stock price.”

The company noted it is considering ways to financially support the wholesalers imposed with additional taxes and promised to prevent such incidents from happening again in the future.