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All-time high penalty of KRW 2.7 billion was imposed due to public interest whistleblowing
- Date2015-01-08
- Hit1,221
April 21, 2014
A food company illegally paying billions of wons to the affiliated company
On suspicion of violating the Monopoly Regulation and Fair Trade Act, a penalty surcharge of KRW 2.7 billion was imposed on a food company that illegally gave billions of wons in sales promotion incentives to its affiliated company after involving the affiliated company in the transaction stage.
The ACRC received a public interest whistleblowing report that food company A, which produces noodles and snack foods, had illegally provided its affiliated company B with human and financial resources for several years. Most shares of the affiliated company were owned by the family of the parent company's CEO.
The ACRC referred the report to the Fare Trade Commission (FTC) for investigation. According to the FTC's investigation, since January 2008, company A has illicitly paid KRW 2.311 billion won to its affiliated company B under the pretext of sales promotion incentives, by supplying its noodle and snack products through company B, and not directly supplying to large retailers.
The FTC imposed the penalty surcharge of KRW 2.751 billion on company A, and the amount of the penalty is an all-time high among penalty surcharges, fines for negligence, and fines imposed due to public interest whistleblowing. If the penalty surcharge is confirmed, the whistleblower is expected to receive 4-20% of the penalty as reward money.
An ACRC official said, "Recently, the number of whistleblowing reports about unfair transactions within enterprises is on the rise." He added that increased public interest whistleblowing would significantly contribute to reducing public interest violations that impede fair trade in the private sector."
A food company illegally paying billions of wons to the affiliated company
On suspicion of violating the Monopoly Regulation and Fair Trade Act, a penalty surcharge of KRW 2.7 billion was imposed on a food company that illegally gave billions of wons in sales promotion incentives to its affiliated company after involving the affiliated company in the transaction stage.
The ACRC received a public interest whistleblowing report that food company A, which produces noodles and snack foods, had illegally provided its affiliated company B with human and financial resources for several years. Most shares of the affiliated company were owned by the family of the parent company's CEO.
The ACRC referred the report to the Fare Trade Commission (FTC) for investigation. According to the FTC's investigation, since January 2008, company A has illicitly paid KRW 2.311 billion won to its affiliated company B under the pretext of sales promotion incentives, by supplying its noodle and snack products through company B, and not directly supplying to large retailers.
The FTC imposed the penalty surcharge of KRW 2.751 billion on company A, and the amount of the penalty is an all-time high among penalty surcharges, fines for negligence, and fines imposed due to public interest whistleblowing. If the penalty surcharge is confirmed, the whistleblower is expected to receive 4-20% of the penalty as reward money.
An ACRC official said, "Recently, the number of whistleblowing reports about unfair transactions within enterprises is on the rise." He added that increased public interest whistleblowing would significantly contribute to reducing public interest violations that impede fair trade in the private sector."
