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Nongshim headquarters in Seoul, South Korea. (Photo courtesy of Nongshim) |
[Alpha Biz= Kim Jisun] The Korea Fair Trade Commission (KFTC) announced on August 6 that it plans to file a criminal complaint against Shin Dong-won, Chairman of Nongshim, for allegedly omitting 39 affiliated companies—including relatives' and executives' firms—from official submissions between 2021 and 2023, in an attempt to avoid designation as a large business group.
According to the KFTC, Chairman Shin failed to report 10 companies owned by his maternal uncle’s family and 29 companies related to Nongshim executives. In 2021 alone, the total assets of the omitted companies amounted to KRW 93.8 billion (approximately USD 72 million).
Due to this omission, Nongshim’s total reported assets in 2021 were KRW 4.9339 trillion—just under the KRW 5 trillion threshold for designation as a public disclosure-targeted conglomerate. As a result, Nongshim evaded large business group designation for that year and was only designated in May 2022.
The omission allowed at least 64 affiliates (including the unreported 39) to avoid regulations prohibiting unfair internal transactions, mandatory disclosures, and other legal obligations applied to large business groups. Some of the unreported companies also received tax benefits by being classified as small and medium-sized enterprises (SMEs).
The KFTC emphasized that Chairman Shin, who has long served as CEO of both Nongshim and its holding company, bore responsibility for identifying and reporting all affiliate companies. It also noted that the unreported firms were traceable through Nongshim’s audit and tax documents and had clear links to Shin’s extended family, who were involved in key family events such as funerals and weddings.
Furthermore, the KFTC found that despite internal acknowledgment in 2023 that some executive-related firms qualified as affiliates, Nongshim failed to voluntarily disclose this information prior to an on-site investigation in July of that year—raising serious concerns about intentional concealment.
Chairman Shin has argued that he was not officially notified of his designation as the “same person” (de facto group owner) until after 2021 and thus was not responsible for submissions that year. However, the KFTC rejected this argument, asserting that Shin had effectively succeeded the leadership and had actual control over the business group, which made him responsible for the disclosures regardless of formal notification.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
