[Alpha Biz= Kim Jisun] Daebang Construction, a major conglomerate with total assets of 816 billion KRW (as of 2024), is under investigation by prosecutors and has been fined more than 200 billion KRW for unfairly supporting companies owned by the family of the company’s chairman.
The company is accused of transferring large-scale public land, including lucrative new towns and innovation cities, to businesses operated by the chairman's daughter and other family members.
The Fair Trade Commission (FTC) announced on Tuesday that it would impose corrective measures and a fine on Daebang Construction for violating the Fair Trade Act, and the company will be referred to prosecutors for further investigation.
The total fine amounts to 20.5 billion KRW, with the breakdown as follows:
▷ Daebang Construction: 12 billion KRW
▷ Daebang Industrial Development: 2 billion KRW
▷ Elium, Elium Development, Elium Housing: 1.12 billion KRW each
▷ DI Development, DI Construction: 1.6 billion KRW each
Elium, Elium Development, Elium Housing, DI Development, and DI Construction are subsidiaries of Daebang Industrial Development.
According to the FTC's investigation, from November 2014 to March 2020, Daebang Construction transferred six public lands to Daebang Industrial Development, a company partly owned by Chairman Gu Gyo-woon’s daughter Gu Soo-jin (50.01%) and daughter-in-law Kim Bo-hee (49.99%), and its five subsidiaries, in violation of fair trade practices.
To increase their chances of winning bids, Daebang Construction used several subsidiaries for what is known as "swarms of bids," a type of rigged auction, to secure public land. This practice had been blocked with the introduction of restrictions on land resale.
Daebang Industrial Development and its subsidiaries purchased public land for 206.9 billion KRW and generated sales of 1.6136 trillion KRW through development projects. These sales accounted for 57% of Daebang Industrial Development's total revenue and 100% of its five subsidiaries' total revenue. These companies earned a total of 250.1 billion KRW in operating profit, excluding land prices.
The five subsidiaries of Daebang Industrial Development were also able to meet the qualification requirements for the first-priority subscription to public land provided by the Korea Land and Housing Corporation (LH), including having a track record of building over 300 housing units in the past three years.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
