HDC has responded to the Fair Trade Commission's criminal referral of HDC Chairman Chung Mong-gyu for failing to report affiliated companies owned by relatives, calling it "a simple omission with no improper intent."
On the 17th, HDC issued a statement saying, "The omission of SJG Sejong and Intrans Shipping—companies managed by Chairman Chung's relatives—and their affiliates from the business group designation filing was merely a simple oversight. We have already improved internal procedures to prevent recurrence."
The company added, "These companies have operated independently from the beginning, so Chairman Chung had no improper intent or motive to deliberately conceal them."
HDC maintains that Chairman Chung has never held any shares in these companies. Since HDC's separation from Hyundai Group in 1999, there have been virtually no transactions or debt guarantees between them, the company said. HDC also claimed that the FTC officially recognized the independent management status of these family-owned companies last year through formal procedures.
"The only transaction was a single building management service contract between Kunsthalle, an affiliate of SJG Sejong, and LABS, an HDC affiliate," an HDC official said. "Even this contract amounts to approximately 190 million won annually, representing just 0.03% of LABS's revenue."
The FTC referred Chairman Chung to prosecutors on the same day for omitting numerous affiliates from data submitted for designation as a cross-shareholding restricted business group. According to the FTC, Chairman Chung excluded 17 affiliates in 2021, 19 in 2022, 19 in 2023, and 18 in 2024. Excluding duplicates, 20 companies were omitted in total.
Among these, 12 companies including SJG Holdings are controlled by the family of Park Se-jong (87), honorary chairman of SJG Sejong and Chairman Chung's maternal uncle. Eight companies including Intrans Shipping are controlled by his younger sister Chung Yu-kyung (56) and her husband Kim Jong-yup (55), CEO of Intrans Shipping, the FTC determined.
The FTC claims these companies avoided regulations on private benefit extraction and disclosure requirements by being excluded from the cross-shareholding restricted business group designation.
This marks the third criminal referral of a conglomerate chairman since FTC Chairman Joo Byung-ki took office. Shin Dong-won (68), chairman of Nongshim, was referred last year, and Kim Jun-ki (82), founding chairman of DB, was referred earlier this year—both for submitting false designation data.
