Most intra-group trading done through negotiated contracts: CEO Score
SEOUL-- Most South Korean big businesses signed negotiated contracts for intra-group trading last year without going through public bidding, industry data showed Wednesday, amid rising concerns about business transparency and fair competition.
The ratio of direct agreement contracts for the 699 companies affiliated with the country's 30 biggest business groups reached 93.2 percent, or 135.8 trillion won (US$121 billion), of the total volume of trading between business affiliates of 145.7 trillion won, according to corporate tracker CEO Score. The findings were based on screening data provided by the country's Fair Trade Commission.
The numbers stood at 100 percent for five business groups: Shinsegae, Hyundai Department Store, Kumho Asiana, KT and G and Buyoung.
Kumho Asiana, KT and G and Buyoung groups, meanwhile, made cash payments for all the intra-group trading.
Hyundai Heavy Industries, KT, SK and NH Nonghyup also signed one-on-one contracts for almost 100 percent of the trading between affiliates, with 99.9 percent for Hyundai Heavy Industries and 99.1 percent for KT. The corresponding numbers for SK stood at 98.5 percent and for NH Nonghyup at 98.3 percent.
S-Oil Corp., meanwhile, did not sign any private contracts for trading between affiliated companies.
Of all businesses examined, 572, or 81.9 percent, only used negotiated contracts for intra-group trading.
One of them, SK Energy, inked 10.6 trillion won worth of deals where it did not go through competitive bidding, followed by 9.4 trillion won for Hyundai Mobis and 3.2 trillion won for LG Electronics Inc.
Cash payments accounted for 97.3 trillion won, or 66.8 percent, of the total trading between business affiliates, while 27.4 percent was paid with promissory notes.
Source: Yonhap News Agency