Ottogi hit for scandals, including selling Chinese seaweed marked as Korean

By Kim Jae-heun

Local food maker Ottogi has earned both the adoration and respect of younger Korean customers for keeping the prices of its products low and also for its ethical corporate standards. But the company now finds itself embroiled in a series of scandals, including allegations of tax evasion and deteriorating food quality.

For the last 10 years, Ottogi has sold dried seaweed products marked as being 100 percent Korean in origin. But it is now alleged that the contents were mixed with ingredients from China.

The Korea Coast Guard (KCG) charged Ottogi's subcontractor in Yeosu, South Jeolla Province, of seven illegal acts, including smuggling seaweed and wrongfully marking the origin of its products. The Coast Guard believes the firm sent Korean seaweed to be sold in mainland China, while replacing the volume sold there with Chinese seaweed that was brought back to Korea.

The KCG reportedly discovered that Ottogi's subcontractor purchased about 3,000 tons of Chinese seaweed, valued at an estimated 5 billion won. The Coast Guard will hand over the case to prosecutors.

Ottogi said there are distorted details related to the scandal, but declined to provide further details, since the case is currently under investigation.

“It is not true that our products have been confiscated, and we terminated our contract with the contractor in question in January. We are currently recalling all seaweed products suspected to have been mixed with Chinese ingredients,” an Ottogi official said.

Ottogi is also suspected of illegally using land near its worksites in North Chungcheong Province, Paju and Pyeongtaek in Gyeonggi Province, and Ulju in Ulsan Metropolitan City, as well as Goseong in Gangwon Province. The food manufacturer allegedly used forest lands near its facilities as parking lots, which violates the Management of Mountainous Districts Act and the Agricultural Land Act. Authorities in Pyeongtaek took administrative action against Ottogi for alleged violations of the law regarding a factory in operation there.

Last year, Ottogi underwent a special investigation by the National Tax Service for suspected tax evasion. Ottogi Chairman Ham Young-joon and Ottogi CEO Lee Gang-hoon are said to have been targets of the investigation on suspicions of tax evasion, creating a slush fund and giving favorable treatment to one particular company.

At the same time, Ottogi is raising the prices of its popular products, including mayonnaise, porridge, seaweed soup and canned tuna, starting from March. It already increased the price of its instant rice last month by 9 percent.

Ottogi said it was simply lowering the discount it had been applying on the prices of these products, and insisted it was not increasing the price.