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SPC Group's chairman Hur Young In has been indicted for underselling stocks owned by the group affiliates. This move is said to be a suspected attempt to avoid gift tax thus, he was charged with breach of trust.
SPC Group is the leading bakery chain in the country, and on Friday, Dec. 16, the prosecutors charged him with the said offense. As per Yonhap News Agency, it was alleged that Hur sold stocks of Mildawon, which is a grain company owned by his family, for KRW255 or about $0.19 per share in December 2012.
The price is said to be far cheaper compared to the estimated price in 2011, which is KRW1,180. Moreover, in 2008, the family's acquisition price was KRW3,038.
It was alleged that the SPC Group chairman sold off the Mildawon shares owned by other SPC affiliates, such as Shany and Paris Croissant. With his action, the officials suspected he was attempting to break away from the gift tax typically imposed when business contracts are granted between affiliates of the same group.
Hur's Mildawon company produces and supplies flour to all SPC bakery brands through Samlip which is another subsidiary of the SPC Group. It was said that it is a structure where the chairman would have been made to pay a transfer tax worth KRW7.4 billion over the next 10 years if no stock sales take place.
The prosecutors surmised that stock dealings brought upon some damage of about KRW5.81 billion on Shany and KRW12.16 billion on Paris Croissant while awarding proceeds worth KRW17.97 billion to Samlip. In any case, the probe on this case was launched by the Seoul Central District Prosecutors Office after minor stakeholders of Shany filed a complaint in October 2020.
While the SPC Group's chairman was already indicted, the prosecutors are continuing with their investigation as there are other allegations of many SPC affiliates helping Samlip earn KRW41.4 billion between 2011 and 2019 by unfair awarding of contracts, with Hur and his family's intervention.
Meanwhile, Korea Joongang Daily reported that the SPC Group released a statement saying it will try to patch up the misunderstanding during trials with respect to the chairman's indictment on Friday.
"The transfer of Mildawon stocks was done according to appropriate process and standards through an accounting firm," the SPC spokesman said. "We will try our best to clear out the misunderstandings during the trial."
