Samyang Foods tarnished by CEO's embezzlement

Samyang Foods' hit instant noodle Hot Chicken Flavor Ramen

By Nam Hyun-woo

Samyang Foods Chairman Jeon In-jang, left, and his wife Samyang Foods President Kim Jung-soo

Samyang Foods, known for its hit instant noodle Hot Chicken Flavor Ramen, will likely lose its momentum in exports, as its reputation has been tarnished after its owner and CEO and his wife were jailed, according to industry officials, Sunday.

The Seoul Northern District Court sentenced Samyang Foods Chairman Jeon In-jang to three years in prison after he was found guilty of embezzling 5 billion won in corporate funds.

His wife, Samyang Foods President Kim Jung-soo, was also sentenced to a two-year term suspended for three years on the same charge.

The court found them guilty of disguising ingredients and packaging boxes supplied from Samyang Foods affiliates as if they were from outside suppliers instead of two paper companies Jang and Kim set up.

Through this document manipulation, the paper companies received payments from Samyang Foods from 2008 to 2017. Of those payments, 40 million won was paid to them under the name of Kim's monthly salary, and a significant amount was also used for their home maintenance, car leasing and credit card payments.

Following their indictment last year, Jang and Kim pleaded guilty.

“The company will decide whether to appeal after reviewing the sentencing,” a Samyang Foods official said. “Because Kim has been leading the company's management since March last year, there will be no leadership vacuum.”

Despite the company's explanation, analysts said it will be inevitable for Samyang Food to suffer serious damage to its reputation as an export champion.

Samyang Foods is expected to log record earnings for 2018, as its instant noodle, better known by its Korean name buldak bokkeummyeon, went viral among foreign consumers. The noodle's development was led by Kim.

In the first half of last year, Samyang Foods logged 249.3 billion won in sales, up 14.2 percent from a year earlier, and posted 31 billion won in operating profit, up 52 percent during the same period. It was the highest number in the company's history.

Buoyed by the success, the company last month won a government award for surpassing $200 million in accumulated exports. It was the first among domestic food firms.

“It seemed the company has already prepared for Jang's imprisonment, because it has already appointed Kim to lead the company,” an industry official said. “Since Kim has led the development of Samyang Foods' hit products in recent years, the company may not suffer a leadership vacuum, but its growth momentum in the export market will be damaged due to the owner family's illegalities.”

Samyang is the No. 3 in the domestic instant noodle market, following Nongshim with a 50 market share and Ottogi with 25.7 percent.