▲ Government Complex Sejong Fair Trade Commission. (Etoday DB)
Hoban Construction, which provided unfair support, such as transferring a large-scale transfer of public land to a company owned by the sons of Chairman Kim Sang-yeol, the same person (head) of the Hoban Group, was fined more than 60 billion won.
The Fair Trade Commission imposed a corrective order and a penalty of KRW 60.8 billion on Hoban Construction, which violated the Fair Trade Act for unfair insider trading practices that unfairly supported lakeside construction houses, lakeside industries, etc. It was announced on the 15th.
Hoban Construction is a core company of the Hoban Group, a large conglomerate, and is engaged in the construction (construction) and sale (implementation) of apartments in public housing. Hoban Construction House is owned by Chairman Kim Sang-yeol’s eldest son, Hoban Group General Manager Kim Dae-heon, and Hoban Industry is owned by his second son, Hoban Industry Managing Director Kim Min-seong.
According to the Fair Trade Commission, the act of supporting this case is related to the implementation and construction of public housing sites. The period from the end of 2013 to 2015 was a time when competition for public housing sites was very fierce among construction companies trying to occupy excellent business sites.
At that time, the principle was to supply public housing sites by lottery, but Hoban Construction mobilized affiliates and non-affiliates to participate in lottery bidding for public housing sites (so-called ‘swarm bidding’) to increase the probability of winning, securing a large number of public housing sites.
Hoban Construction gave 23 of the secured public housing sites to Hoban Construction Housing, Hoban Industry and its 100% subsidiaries owned by the second generation of the same person.
Yoo Seong-wook, head of the Business Group Supervision Bureau of the Fair Trade Commission, said, “Although all of the transferred public housing lands are lands where large profits are expected as a result of the business feasibility review of Hoban Construction, Hoban Construction intends to pass on the profits from future public housing site implementation projects to second-generation companies. As a result, in 23 public housing site implementation projects, the same second-generation companies earned 5.8575 trillion won in sale sales and 1.3587 trillion won in sales profit.”
Hoban Construction also loaned a total of 1,575.3 billion won for short-term (average 3.67 days) free of charge 414 times to participate in bidding for public housing sites such as lakeside construction housing and lakeside industry. No interest was charged on it.
These companies were able to participate in the bidding with the support of Hoban Construction even though they did not have enough funds, and were able to save at least 519.81 million won in interest expenses.
Hoban Construction also provided free payment guarantees for a total of 2,639.3 billion won in project financing (PF) loans for 40 public housing site projects implemented by the same second-generation company.
And that’s not all. In October 2017 and July 2018, when Hoban Construction Housing and Hoban Industry newly acquired licenses for general construction business and qualified for construction, Hoban Construction discontinued the apartment construction work it was already carrying out (construction was suspended). ) and handed it over to the second-generation companies. Construction business opportunities worth 93.6 billion won were provided to second-generation companies.
Director Yoo pointed out, “Due to the act of unfair support, the second-generation companies of the same person grew rapidly, and the fair trade order was disrupted, such as significantly strengthening their position in the residential real estate development and supply market and general construction market.”
“In particular, when Hoban Construction merged with Hoban Construction Housing in December 2018, the eldest son, Kim Dae-heon, secured a 54.73% stake in Hoban Construction, the representative company of the Hoban Group, after the merger, effectively completing the succession of management rights.”
This was influenced by the fact that during the support period, the lakeside construction house grew to a larger size than the lakeside construction house, and the value of the lakeside construction house was evaluated higher during the merger process.
Regarding the reason for not taking action against the prosecution against the second generation of the same person, Yoo said, “The statute of limitations has exceeded 5 years from the end of the act, so I did not file an accusation.”