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The Fair Trade Commission investigated the suspicion that GS Group provided unfair benefits to the owner’s family by driving them away. This is the first time since GS was separated from LG in 2005 and launched as a separate group.
According to the government and related industries on the 4th, the FTC’s corporate group bureau conducted a field investigation at GS Caltex headquarters in Yeoksam-dong, Seoul for three days from the 16th of last month. The FTC has secured internal data on the transaction relationship between GS Caltex and GS ITM, costs and unit prices, and it is reported that it has received statements from key executives.
GS ITM is a system integration (SI) company of GS Group, established in 2006. The owner’s family, including GS Energy Executive Vice President Heo Seo-hong and Heo Yun-hong, vice president of GS E&C, owned 100% of the stake. However, it is known that the owner’s family’s ownership ratio is slightly less than 20%, since 80% of the stake was sold to a private equity fund in 2018. The FTC believes that there is a possibility that a large number of internal transactions made when GS ITM’s internal proportion was 70% or more could be detrimental.
GS Group said, “It is true that the FTC is investigating,” and said, “As we are doing business with affiliates through transparent standards, various suspicions will be resolved during the investigation process.” In addition to the investigation on GS ITM, the FTC is reported to have requested data from the S&T headquarters, which is responsible for introducing crude oil from GS Caltex, and the lubricant business headquarters, and there is an observation that the investigation may expand.
It is said that the Fair Trade Commission looked into the GS Group from the beginning of this year. A GS official filed a whistleblower with the FTC with the content that’I report corruption in the family of GS Caltex Chairman Huh Dong-soo.’ The Fair Trade Commission assigned the case to the Business Group Bureau in February and completed a field investigation in March. GS Group appointed Yulchon, a law firm, and formed a task force for investigating and responding to the FTC.
The FTC is investigating whether GS ITM, a system integration (SI) company of GS Group, was used as a window for providing unfair benefits to the owner’s family. The 80% stake in GS ITM was sold to the private equity manager IMM Investment-JKL Partners Consortium in 2018. Until then, it was 100% owned by the family of GS owners, such as Heo Seo-hong, executive director of GS Energy, and Heo Yun-hong, vice president of GS E&C.
GS ITM’s share of internal transactions exceeded 70% until 2018, and it is reported that it is still around 60-70%. The industry estimates that the reason for the sale of the stake in 2018 is that unlisted companies with a 20% or more stake in the owner’s family could face FTC sanctions if their internal transaction amount exceeds 20 billion won or 12% or more of annual sales.
An industry insider said, “At the time of the sale, the GS owner family is known to have a call option clause to publicize GS ITM by 2023 and regain a 10% stake.” “The Fair Trade Commission is checking whether such a transaction violates the law.” Told. This is because the owner’s family may suspect that GS ITM was’fake sold’ to a private equity fund while maintaining substantial control. When the Korea Economic Daily asked GS Group, GS Group replied, “It was the sale of GS ITM to a private equity fund in 2018 in order to solve the rush of work.” “It is difficult to confirm specific and individual details.”
Reporter Jihoon Lee [email protected]
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