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[Newsmaker] Shinsegae chief faces stormy seas in court

Shinsegae Group vice chairman Chung Yong-jin is facing rough seas since taking the helm of the nation’s second-largest retail giant.

The prosecution grilled him for 12 hours on Tuesday over allegations that he ordered Shinsegae affiliates to charge their sister bakery firm Shinsegae SVN cheaper commissions to help turn it around.

On Thursday, the Seoul Regional Labor Administration raided Shinsegae E-Mart headquarters and several E-Mart stores to search for evidence that the company had spied on its employees in an effort to keep them from joining the union.
Chung Yong-jin
Chung Yong-jin

The intensive probe on Chung and his empire comes as the prosecution, the antitrust watchdog and even the police are gearing up to scrutinize conglomerates under President-elect Park Geun-hye’s strong pitch for “economic democratization” and sanctions against unfair practices by chaebol.

Chung is also facing trial for refusing to show up at parliamentary hearings on retail giants’ abuse of power over smaller retailers and traditional marketplaces.

In late October, a civic group filed a complaint with the prosecution against the Shinsegae management, accusing them of a breach of trust for giving preferential treatment to Shinsegae SVN at the great expense of small businesses.

The Fair Trade Commission had slapped Shinsegae with fines of over 4 billion won ($3.6 billion) for “unfair backing” of Shinsegae SVN earlier that month, claiming it had circumstantial proof that Chung was involved in making Shinsegae department stores, supermarkets and E-Mart apply cheaper commission rates to the sister bakeries. Chung Yu-kyung sold off her 40 percent stake in Shinsegae SVN in December.

The vice chairman denied involvement during questioning on Tuesday.

Last month, an opposition lawmaker disclosed E-Mart’s internal documents in which employees were classified by their level of discontent with the firm and likelihood of organizing a union.

A network of civic groups then lodged a complaint against E-Mart with the prosecution and the labor administration for obstruction of business and violation of the private information law, saying the company used the resident registration numbers of its workers to find out if they joined unions.

By Kim So-hyun (sophie@heraldcorp.com)
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