Seoul: South Korea's antitrust regulator announced that it has imposed a 17.13 billion-won (US$11.61 million) fine on major construction firm HDC Holdings Co. for improperly supporting an affiliate facing a management crisis. The Fair Trade Commission (FTC) has mandated corrective measures, highlighting that HDC Holdings provided large-scale funds to its affiliate, HDC I'Park Mall, without charge. The FTC also plans to refer HDC to prosecutors.

According to Yonhap News Agency, HDC I'Park Mall, which operates a shopping complex, faced a severe management crisis back in 2006 due to low tenant occupancy rates. HDC allegedly disguised the financial aid as a lease agreement, which allowed HDC I'Park Mall to manage store operations while collecting fees and usage profits.

The FTC noted that while the transactions were structured as a lease and management delegation contract, they essentially amounted to a low-interest loan. Over a span of more than 17 years, HDC I'Park Mall borrowed between 33.3 billion won and 36 billion won but only paid 4.7 billion won in interest to HDC. This arrangement allowed the affiliate to save 45.8 billion won in interest costs.

In response to the allegations, HDC denied any wrongdoing, asserting that the lease and management delegation agreements were strategic measures to address vacancies and foster mutual growth. The company stated, "It is not true that we disguised a loan as a lease transaction to provide funds in the form of a deposit," and indicated its intention to pursue legal procedures.