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| ▲ This image provided by Hoban Construction Co. shows the logo of the company. (PHOTO NOT FOR SALE) (Yonhap) |
(LEAD) regulator-construction firm
(LEAD) Regulator slaps 60.8 bln-won fine on Hoban Construction for internal trading
(ATTN: UPDATES with more details in last 3 paras)
By Kang Yoon-seung
SEJONG, June 15 (Yonhap) -- South Korea's antitrust regulator said Thursday it has decided to slap a fine of 60.8 billion won (US$47.7 million) on Hoban Construction Co. for unfair internal trading that benefited affiliates led by the owner's sons.
The punitive move came as the country's 11th-largest construction firm offered interest-free loans and business opportunities to affiliates, including Hoban E&C Co., between 2013 and 2015, according to the Fair Trade Commission (FTC).
According to the regulator, Hoban Construction provided interest-free loans to affiliates, primarily led by sons of the company's founder Kim Sang-yeol, on more than 414 occasions. These loans were intended to assist them in participating in bids for public housing construction projects.
Hoban also directly transferred 23 projects it won to the affiliates, which helped them raise profits of 1.35 trillion won (US$1.05 billion).
The company offered guarantees for project financing loans of 2.6 trillion won as well, a move that eventually helped Kim's eldest son win a controlling stake in Hoban Construction through the merger, the FTC said.
"The extensive support provided facilitated substantial growth for the companies led by the owner's sons. These actions hindered fair trade competition by strengthening their presence in the housing development and construction market," the regulator said.
The FTC said the punitive move is notable as the regulator cracked down on the illegal transfer of wealth by a controlling family of a business group.
Hoban expressed regret over the decision.
"We deeply regret that despite our comprehensive explanations during the investigation, our stance was not adequately reflected in the verdict of the Fair Trade Commission," Hoban said in a statement, adding it will carry out follow-up measures as soon as it receives the related document.
"Regardless of the outcome, we feel sorry for causing concerns for many, including clients, subcontractors and employees. We plan to bolster efforts to fulfill our social duty as a corporation by setting stricter legal management standards."
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