[Stock Disclosure - National Tax Service Investigation Bureau 4 Launches Special Tax Audit of KD Resort]
[National Tax Service: “Investigation Based on Anonymous Tip; Report Received Is Highly Credible”]
[After Resort, Galleria Next? Investigation Bureau 4 Announces Special Investigation Across KD Group Affiliates!]
A single late-night phone call from Nam Sanggi was enough to shake KD Group to its very foundations.
Information poured into the National Tax Service—information no one but an insider could have known—and it soon led to a special tax audit.
Many experts viewed the recent series of events as a struggle for management control within KD Group. And understandably so. The one place that would never move unless someone was pulling strings was Investigation Bureau 4 of the National Tax Service.
“Does this make any damn sense!”
KD Resort headquarters.
The second son, Nam Mingi, summoned the executives and spent a long while hurling every profanity he knew.
In truth, tax evasion by chaebol families was technically impossible. Large corporations underwent regular tax audits every five years, and the intensity of those audits was about the same as a special tax audit for ordinary companies.
As such, this tax audit by the National Tax Service was also proceeding over extremely petty, nasty, and peripheral issues.
“Director Kim, what’s happening?”
Director Kim, head of the legal team, spoke with a dark expression.
“It’s an insider... Most of the documents Bureau 4 is demanding are things no one but an insider could know.”
“Do you think I’m here to hear obvious bullshit? We can find the rat later! I’m asking if we can respond to the National Tax Service audit!”
“I-I’m sorry. To be blunt, this won’t be an easy fire to put out.”
“What?”
“This isn’t at the level of a tax audit. It’s at the intensity of a financial crime investigation. Paper companies established overseas, records of funneling work to affiliates... On top of that, they’re conducting high-intensity investigations into every area, from key executives’ company card statements to company car driving logs.”
Of course, the fact that large corporations underwent regular tax audits every five years did not mean tax evasion was completely impossible.
It was entirely possible to set up a paper company overseas and receive royalties, create a suitable affiliate and funnel work to it, or put every living expense on a company card and process it as an expense.
As the saying went, no one was dust-free if you shook them hard enough. If Investigation Bureau 4 launched a targeted investigation, it could turn even a traditional market shop owner into a tax criminal worth hundreds of millions.
Bang!
Nam Mingi’s hands trembled.
“Am I the only one who does that shit? Digging through company cards and company car logs means they’re really trying to go to war with me!”
Just as Nam Mingi shouted, the conference room door opened with a clatter and the youngest, Nam Yeonggi, came in.
“Second Brother, what the hell is going on? Did Eldest Brother really do this?!”
Judging by his expression, the executives on the youngest brother’s side had already reached the same conclusion.
Nam Mingi dismissed all the executives, then spoke to his youngest brother.
“Eldest Brother—no, that bastard did it. Our executives all said this was information no one but an insider could know.”
“No, what kind of insider betrays the master who pays his salary and sides with that bastard?!”
“Former executives, or current executives who want to switch lines. But that’s not what matters right now.”
“What?”
“What matters isn’t who he bought off, but why that bastard did this.”
A brief silence passed between them.
They remembered what their eldest brother had said during their father’s memorial rite, asking them to think of him as a professional manager.
“No, then he was serious? He inherited all the core affiliates, and now he wants us to hand over the profitable ones too?”
“Looks that way.”
“Why the hell? With the defense industry booming, our sales can’t even compare. Even if you add up all the affiliates we have, they’re not worth half of Techwin’s market cap!”
Unlike his younger brother, whose voice ran ahead of him, Nam Mingi at least knew the basics of management. He recalled what their eldest brother had casually said about KD Solution.
The renewable energy business their eldest brother had started ten years ago appeared to have ended in failure. Even domestically produced solar panels had lost their entire market share to Chinese products, and they were effectively in the process of withdrawing.
At first, they had lost market share to low-price offensives, but now it was true that even their technology was falling behind. Many experts predicted that Korea’s main energy source would ultimately be nuclear power, and that even if it were replaced with renewable energy, most of that work would go to China.
“Looks like he intends to try anyway.”
“What?”
“Why else would he try to take the affiliates from his younger brothers? He’s planning to pour the money earned here into his deficit-ridden affiliates.”
“That crazy bastard!”
“Yeonggi, calm down already. Right now, we need to think very coldly about how to stop this lunatic.”
At his second brother’s rebuke, the youngest calmed his excitement.
“From the way you’re talking, Brother, it sounds like you’ve already thought of a countermeasure.”
“What else is there but a dogfight?”
“...A dogfight?”
“They threw mud first, so we respond. Frankly speaking, what’s so surprising about an owner setting up a paper company? Do other chaebol families not funnel work to affiliates?”
“Th-that’s true.”
“That bastard made a mistake. No matter how blinded he was by money, digging into company cards and driving logs crossed the line.”
“...So what are you going to do, Second Brother?”
“We pay him back in kind. You think that bastard’s companies don’t have former executives? We’ll recruit every bastard we can and humiliate him the same way.”
The second son’s eyes burned fiercely.
He knew the next step all too well. A general shareholders’ meeting would soon be convened, and a motion to dismiss the CEO would be put on the agenda. There had been a precedent during the nut rage incident in which a CEO was dismissed over moral issues involving the owner family, so they would follow the same procedure this time as well. Then it was all too obvious who would take the empty seat.
“...”
He could not sit back and let it happen.
He did not know about the other affiliates, but with these profitable ones, their father had left him twice as many shares as their eldest brother. If they shook every last speck of dust off their eldest brother’s hands and turned this into an all-or-nothing shitshow, there was no way they could lose.
“That bastard miscalculated this time. He probably thinks that if he colludes with a few private equity funds and fills up enough neutral shares, he’ll pass the majority. Not a chance. If that bastard gets attacked on morality too, the neutral shares will never go to him. No, maybe our friendly shares will increase instead.”
Knock, knock.
Just as he was getting worked up, the secretary opened the door with a dark expression.
“What is it? I told you not to let any other executives in.”
“It’s not that. Chairman, an important person has come to see you.”
“An important person? Who?”
The secretary glanced around briefly, then whispered into Nam Mingi’s ear.
After confirming who the guest was, Nam Mingi shot to his feet and spoke urgently.
“Damn it, this is nothing serious! H-hurry and bring him in. Escort him respectfully.”
*
Following the secretaries’ guidance, I arrived at a conference room, where the awkward smiles of Chairmen Nam Mingi and Nam Yeonggi were waiting for me.
“It’s an honor to meet you, Team Leader. I’m Nam Mingi of KD Resort.”
“I’m Nam Yeonggi, in charge of Galleria.”
Their faces were smiling, but their eyes were full of murderous intent.
“Yes, nice to meet you. I’m Lee Sejun, team leader of the Pension Fund Risk Team. The reason I’ve taken the liberty of visiting like this is...”
“We know everything. But Team Leader, allow me to say this first. This is a misunderstanding.”
Before I could even finish speaking, the second son pleaded with me.
“Of course, I’m deeply sorry for causing controversy with this disgraceful matter. But the recent tax audit being conducted by the National Tax Service is clearly scripted.”
“A targeted investigation, you mean?”
“Yes. You may not believe it, but our eldest brother—no, Chairman Nam Sanggi—is after our shares right now. As if inheriting the core affiliates from our father wasn’t enough, he’s now aiming for the profitable affiliates too.”
I asked, pretending not to know.
“Do you have grounds for saying that?”
“Of course. How could I dare speak nonsense to you?”
“It’s hard to believe...”
“I heard it together with my younger brother here! A few days ago, Eldest Brother called us during our father’s memorial rite and brought up the affiliates. He said the defense industry couldn’t stay in a boom forever, and that if we invested in renewable energy, KD Group’s future growth engine, massive deficits were expected. And then, out of nowhere, he told us to hand over management control!”
“...”
“That’s right, Team Leader! I heard it from beside him too. He told us to think of him as a professional manager, and then suddenly demanded that we hand over management control!”
“But Team Leader, this shouldn’t be allowed, should it? Using profitable affiliates as cash cows for deficit-ridden affiliates is a violation of securities market law and a criminal act.”
“That’s right! Chairman Nam Sanggi has gone mad over his younger brothers’ rice bowls and is doing something reckless and absurd!”
The two brothers must have felt extremely wronged, because they talked without pause.
I asked,
“If that’s the situation, we can verify it in due course. But the pension fund is not an organization that gets involved in every detail of family affairs. The allegations currently reported in the media—how much of them is true?”
The two brothers’ mouths shut in an instant.
“Please answer me. Laundering slush funds through paper companies, funneling work to affiliates, private misuse of company cards. Are all of the details announced by the National Tax Service true?”
“T-Team Leader, please think flexibly about that.”
“Flexibly?”
“They were mistakes... Yes, mistakes. But what chaebol family lives without making such small mistakes? If you judge Chairman Nam Sanggi by the same standard, he won’t be much different. No, since his scale is larger, he probably pocketed even more slush funds than we did.”
“That’s right, Team Leader! If you want to know the truth, please wait just a little longer. We’re also investigating every issue related to Chairman Nam Sanggi, and as soon as we identify the materials, we’ll hand them over to the prosecution.”
I replied,
“There’s no need for that.”
“Pardon?”
“I don’t know the details, but I find Chairman Nam Sanggi’s vision more compelling.”
“Wh-what do you mean?”
“Even during the IMF crisis in 1997, Korea did not give up its semiconductor business. Thanks to that, it is now enjoying an unprecedented boom. I believe the renewable energy business will be the same. Deficits may be unavoidable for a while, but enduring those deficits by any means necessary seems more in line with a national vision.”
The two brothers asked me with faces gone cold and stiff.
“Then are you saying... we should hand our shares over to Nam Sanggi?”
“I don’t believe Chairman Nam asked for your shares. ‘I’ll earn the money, so step away from management’... What your older brother wants isn’t your shares, but management control, isn’t it?”
“How... how did you know that?”
With a bitter smile, I held out a document.
“I’m sorry, but for the greater cause, the two of you will have to yield.”
“P-pardon?”
“These are materials on both of your companies obtained from reliable people. But after looking at the contents, I think this isn’t a matter for the National Tax Service, but for the prosecution.”
The two men turned deathly pale after checking the documents.
“Do as Chairman Nam wants. Even if you oppose your older brother, the pension fund’s shares will not be on your side.”
“W-wait...”
“But if you ignore this, a matter that could end with penalty surcharges will end with prison sentences. You know very well what kind of group prosecutors are. If there are no charges, they’ll investigate something else, and then something else, and then something else again, until they create charges no matter what.”
“...”
“Don’t get into a mud fight with your older brother. I will safely protect both of your shareholdings.”
Looking at my impassive face, the two of them seemed to realize it.
That Nam Sanggi and I were on the same side.