8 Korean cable makers fined for price-fixing

2013-10-10 17:34

8 cable makers fined for price-fixing

By Kim Tae-jong
The nation’s anti-trust watchdog said Thursday it has imposed a combined fine of 6.2 billion won on eight major cable makers for price-fixing and decided to refer the case to the prosecution. The Fair Trade Commission (FTC) said eight cable manufacturers, including LS, LS Cable & System and Taihan Electric Wire, colluded to supply cables used in nuclear reactors at high prices.“Sales officials from those cable makers met before an official bidding for new reactors, and they chose bidders for different cables among themselves,” an FTC official said. “Later, they made an official bid at lower prices so that already-selected firms would be picked up as official suppliers, and that way, they could all get contracts at high prices for different products.”
The allegations over the irregularities were first made after the corruption scandal related to nuclear reactors was revealed in June.
Saehan Total Engineering Provider (Saehan TEP) was the official testing company for the main machine interface system that would be used in the reactor.
But the firm was found to have forged the test results of substandard cables, which were later used in building two nuclear reactors.
The Singori Reactor 1 and the Sinwolsung Reactor 2 were shut down as a result, and the investigation by prosecutors discovered that high profile figures were also involved in the scandal, including Lee Jong-chan, senior executive vice president of the state-run Korea Electric Power Corp., former Knowledge Economy Minister Choi Joong-kyung and vice minister Park Young-joon.
“Collusion can easily be attempted in the reactor cable market,” the FTC official said. “There are only a few qualified firms and they can easily know when cables will be needed.”
The amount of fines was decided based on how much each company gained unfairly through price fixing.
Taihan was slapped with the heaviest fine of some 13.8 billion won, followed by LS Cable & System with about 13.7 billion won, JS Cable with about 13.4 billion won and Seoul Cable with 919 million won.
Along with the heavy fines, FTC also made a request to prosecutors to investigate six of them for additional collusion charges.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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