While large conglomerates are selling subsidiaries to be free from the controversy about giving preferential treatments to companies run by members of their owner families, Celltrion has stirred up controversy by allegedly giving favors to the companies owned by a relative of Chairman Seo Jeong-jin.
Celltrion already caused controversy in 2016 by excluding a subsidiary that received preferential treatments from the documents submitted to the government for the designation of companies subject to restrictions in cross shareholding.
According to the Korea Fair Trade Commission and industry sources, Celltrion Group has nine subsidiaries and 8.6 trillion won in total assets. As its assets exceed 5 trillion won, it is subject to the regulation that bans owners of conglomerates from pursuing private interests and to the obligation of public notice.
Celltrion, however, was found last year to have given preferential treatments to TSENC and TSENM, which were run by a relative of group chairman Seo Jeong-jin.
According to a survey of internal transactions at 52 companies conducted by CEO SCORE, a business management performance evaluation site, all of TSENM’s sales of 7.28 billion won last year came from deals with Celltrion. This company, in turn, awarded contracts to its parent company, TSENC.
TSENC, a company that builds environmental facilities, signed contracts worth 3.14 billion won last year, which amounts to 50% of its sales, with TSENM and Celltrion. In particular, TSENC earned 2.992 billion won, 47.8% of its last year’s sales, from TSENM.
The problem is that TSENM and TSENC are operated by Park Chan-hong, a close relative of Chairman Seo.
Celltrion Skin Cure, a cosmetics company headed by Seo Jin-seok, the son of chairman Seo, was also found to have earned 492 million won last year from transactions with Celltrion and subsidiaries including Celltrion Healthcare, Celltrion Entertainment, Celltrion Pharm and Celltrion Chem.
In response, an official from Celltrion dismissed suspicions of sweetheart deals, saying, "As far as we know, the transactions with the companies are related to security issues."