'First Trial for Chung Mong-gyu Over Alleged Concealment of Affiliates... Claims They Were "Companies He Did Not Know and Did Not Own Shares In"'

[Financial News] Chung Mong-gyu, chairman of HDC Group, who is accused of intentionally omitting information on about 20 companies owned by relatives, completely denied the charges at his first trial. His defense argued that there was a serious error in the legal interpretation treating companies in which Chung personally owned no shares as controlled companies. It also maintained that he could not properly determine whether the companies even existed, making it difficult to establish intent to omit the information.
Judge Lee Hwan-gi of the Seoul Central District Court’s Criminal Division 26 held the first hearing on the charges against Chung Mong-gyu for violating the Monopoly Regulation and Fair Trade Act on the 4th.
Chung is accused of intentionally omitting 20 companies controlled by relatives on four occasions between 2021 and 2024 while submitting data to the Korea Fair Trade Commission for the designation of large business groups. After the court issued a summary order imposing a fine of KRW 150 million in June, he rejected it and requested a formal trial.
Chung’s attorney, who appeared in court with him, made clear that the defense could not accept the charges. The main issue it raised was the Korea Fair Trade Commission’s interpretation of the law.
The attorney emphasized, "Under the Fair Trade Act, a business group refers to companies effectively controlled by the same person, or the group’s owner. However, the companies listed in the indictment are not effectively controlled by the defendant. Most of them are companies whose names he does not even know, and they are operated completely independently."
The attorney particularly argued, "The Korea Fair Trade Commission designates a business group even when the same person owns not a single share and only related parties hold shares. This is an erroneous legal interpretation that directly contradicts the language of the statute and the purpose of the parent law."
The companies whose information was omitted are reportedly 20 corporations owned or controlled by Chung’s younger sister’s family, including SJG Sejong and affiliates of INTRANS SHIPPING, and by his maternal uncle’s family, including Kunsthalle. Their combined total assets amount to around KRW 1 trillion annually. The Korea Fair Trade Commission maintains that circumstances indicating awareness, including reviews of the related companies by Chung’s secretariat, exist and that the lengthy omission period sufficiently establishes intent. It considers the false submissions to have continued for as long as 19 years, from 2006, when Chung was designated as the owner of HDC, a business group subject to restrictions on cross-shareholding, through 2024.
The defense countered, "The defendant did not own any shares in these companies, and his relatives operated them independently, so he had no intention of submitting the information. Even if he had wanted to submit it, he could not physically obtain the documents. There was no intent required for criminal punishment."
The upcoming trial is expected to focus on the legal question of whether the omitted companies should be regarded as part of a business group controlled by Chung, as well as whether the false or omitted submissions were intentional. Prosecutors plan to call employees of the companies and officials from the Korea Fair Trade Commission as witnesses and question them.
[email protected] Lee Chang-hoon Reporter