The Fair Trade Commission confirmed that it has decided to submit a proposal to the prosecution to investigate allegations filed against Hyosung Group CEO and former Chairman Cho Suck-rai and his eldest son, Chairman Cho Hyun-joon, over alleged misappropriation of funds.
The commission is set to hold a plenary session next month to review its final report and conclude its findings before filing the proposal with the Seoul Prosecutor’s Office.
The proposal is said to include the names of four parties including two members of Hyosung Group and Hyosung Investment and Development, as well as CEO Cho and his son.
Prosecutors raided Hyosung’s Seoul headquarters last month over allegations the Cho family has been running slush funds through four of its affiliate companies for Cho Suck-rai and Cho Hyun-joon, who was named head of the company late last year.
The allegations regarding the misappropriated funds came to light after Cho Suck-rai’s younger son, Cho Hyun-moon, filed a complaint with the prosecution’s office to investigate his father and older brother, following a feud over Cho Hyun-joon’s succession as Hyosung’s new leader.
The FTC launched its investigation into Hyosung Group a year ago, on suspicion that its affiliate companies were in violation of provisions against unfair profit acquisitions.
Light-emitting diode manufacturer Galaxia Electronics, one of the company’s subsidiaries, recorded a deficit of 10.4 billion won ($9.57 million) and 3.9 billion won in 2014 and 2015, respectively. The company was a privately owned corporation with 62.78 percent owned by former Chairman Cho.
Galaxia Electronics later issued convertible bonds worth 1.2 billion won and 1.3 billion won in 2014 and 2015, respectively, and was purchased by Hana Investment & Securities. During the process, Hyosung invested a total of 296 billion won worth of land and buildings as collateral. At the time, Hyosung Investment and Development was an affiliate with a 58.75 percent share of Hyosung Corp. and 41.1 percent owned by Cho.
By Julie Jackson (firstname.lastname@example.org