Continuous Ordeal
Kim Joon-ki, chairman of Dongbu Group which just got out of nearly three years of restructuring, is stumbling again.
According to industry sources and financial authorities on May 18, the Financial Supervisory Service (FSS) found out that Chairman Kim held hundreds of thousands of shares in the group’s key affiliates, including Dongbu Corp., Dongbu Engineering & Construction, Dongbu Securities and Dongbu Fire Insurance by using different false-name stock trading accounts for 20 years from the 1990s.
The FSS found the alleged fact after it started its investigation on the stock transaction data received from the Market Oversight Commission at the Korea Exchange. Kim’s stocks were valued at tens of billions of won. During the investigation by the FSS, Kim admitted he had borrowed-name stock trading accounts in a bid to defend his control over the group, which was one of the past practices.
However, financial authorities said that Kim was estimated to save millions of won by selling off his hundreds of thousands of stake in the group’s subsidiaries in October 2014, two months earlier than the Dongbu Engineering & Construction’s filing for court receivership in December 2014, based on the insider information. At the regular meeting of the Securities & Futures Commission on the same day, the FSS will discuss and resolve the case and refer it to the prosecution.
However, Kim said it’s unfair. An official from Dongbu Group said, “Kim voluntarily reported his borrowed-name stock to the National Tax Service in 2011 and already paid 18 billion won (US$15.2 million) of taxes. Since then, he continuously sold the stock and the last sale completed in October 2014. He was forced to sell the stake to prevent disadvantages before the implementation of the revised the real-name financial system which became stricter from November 2014. It has nothing to do with the court receivership of Dongbu Engineering & Construction.”
In addition, Kim is currently accused of illegal support to Dongbu Securities in the process of taking over Daewoo Electronics in 2013 by an investor.