Are Conglomerates Paying Dividends to Family Members through Unlisted Firms?
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Synopsis
In an intriguing turn of events, family members of South Korean conglomerates are reportedly receiving hefty dividends from unlisted companies amid economic challenges. This raises questions about corporate governance and the ethical implications of such practices.
Key Takeaways
- Dividend payouts from unlisted affiliates can exceed profits.
- Corporate governance requires stricter regulations.
- Whistleblower reward systems need enhancement.
- Political instability influences economic conditions.
- Financial sanctions for suspicious transactions are necessary.
Seoul, July 13 (NationPress) Recent financial data reveals that certain family members of South Korean conglomerates have benefited from substantial dividend payouts from their unlisted subsidiaries, even in the face of a widespread economic downturn influenced by political turmoil and apprehensions regarding US tariffs.
As per audit documents available on the electronic disclosure platform managed by the Financial Supervisory Service, Samyang International Co., a non-listed subsidiary of GS Group involved in the golf and tobacco sectors, disbursed a remarkable total of 10 billion won (approximately $7.25 million) in dividends over the last year.
This payout exceeded the company’s annual net profit of 9.19 billion won, according to reports from Yonhap news agency.
Out of the 10 billion won, it is estimated that 8.2 billion won was allocated to three members of the founding family of GS Group, including Huh Joon-hong, the principal shareholder and the heir to the conglomerate.
Huh and his family have also benefited from dividends totaling 13.2 billion won from two other unlisted companies, including Samjoung Development Co.
Additionally, K Cube Holdings Co., a firm entirely owned by Kakao Corp. founder Kim Beom-su, opted to distribute 15 billion won in dividends despite reporting a net loss of 3.35 billion won last year.
Gwangyoung Construction Co., an unlisted subsidiary of the real estate heavyweight Booyoung Group, recently allocated 16.3 billion won to Chairman Lee Joong-keun and 3.2 billion won to his eldest son, Lee Sung-hoon, despite the company's net profit being only 14.7 billion won last year.
Experts have highlighted the necessity for the government to impose stricter regulations on corporate governance and enhance the oversight roles of boards at unlisted entities.
"It is crucial to strengthen financial penalties for dubious transactions occurring between listed and unlisted firms," stated Lee Hyo-seob, a researcher from the Korea Capital Market Institute. "Moreover, the reward systems for whistleblowers must see significant improvements."
Point of View
It is essential to approach this matter with a balanced perspective. While such financial distributions may raise eyebrows, they also highlight the ongoing need for stringent regulatory frameworks to ensure corporate transparency and accountability. We must advocate for a governance model that serves the interests of all stakeholders, not just a select few.
NationPress
13/07/2025
Frequently Asked Questions
What are the implications of dividend payouts from unlisted firms?
Dividend payouts from unlisted firms can raise concerns regarding corporate governance, transparency, and the potential for conflicts of interest, particularly when they disproportionately benefit family members of conglomerate owners.
How do these dividend distributions affect overall market health?
Such distributions can impact investor confidence and market perception, especially if viewed as indicative of poor governance practices within the corporate sector.
What measures can be taken to enhance corporate governance?
Implementing stricter regulations, increasing board oversight, and fostering a culture of transparency can significantly improve corporate governance practices.
