Taekwang fined for irregular support for affiliate

The Fair Trade Commission said Sunday it fined nine Taekwang Group companies 4.6 billion won ($4.23 million) for illegally supporting one of its affiliates. The watchdog referred three of them to the prosecution for investigation.

It is the first punishment of conglomerates since the FTC pledged last week to toughen its crackdown on irregular inter-affiliate transactions which conglomerates have often used to evade taxes and hide the transfer of owners’ wealth to their siblings.

The nine companies were found to have provided interest-free loans to a developer 100 percent owned by the group’s owner family, when it was establishing a golf course in 2008.

The fund was given in the disguise of golf membership fees, the antitrust body said.

The FTC filed complaints against three companies -- Taekwang Industrial, Heungkuk Life Insurance and Daehan Synthetic Fiber. The first two firms allegedly offered the most sum and the other offended repeatedly, the watchdog said.

Taekwang Group denied the charges. The companies bought golf memberships to “facilitate business and improve corporate image, not to provide financial support,” the group said in a statement.

The group said it will file a suit against the FTC’s decision.