Supreme Court Acquits SPC Group Chairman Heo Young-in of Stock Transfer Charges

On December 12, 2024, the Supreme Court of South Korea confirmed the acquittal of Heo Young-in, the chairman of SPC Group, who was accused of instructing the sale of affiliate stocks at a low price to evade gift taxes. This ruling follows a previous Supreme Court decision in June that annulled a fine of 64.7 billion won imposed by the Fair Trade Commission due to allegations of unfair support to affiliates in 2020.

The Supreme Court's second division, led by Justice Park Young-jae, upheld the lower court's ruling of not guilty for Heo, as well as for Jo Sang-ho, the former CEO of SPC Group, and Hwang Jae-bok, the former representative of SPC.

The charges stemmed from a transaction in December 2012, where Heo and others were accused of transferring shares of Milldawon, a flour production company owned by SPC affiliates Shani and Paris Croissant, to another affiliate, Samlip, at a price of 255 won per share. This price was significantly lower than the acquisition cost of 3,038 won in 2008 and the fair market value of 1,595 won determined by prosecutors. The prosecution argued that Heo intended to avoid approximately 700 million won in gift taxes related to the 'work allocation' scheme introduced in January of that year, which imposes taxes on profits gained from directing work to companies where family members are shareholders.

However, both the first and second trials concluded that the method of stock valuation was not illegal and that there was no evidence of intentional wrongdoing by the defendants. The Supreme Court reiterated that there was no misinterpretation of the law in the original not guilty verdict.

Heo's attorney, Seong Chang-ho from the law firm Kim & Chang, stated that the transfer of Milldawon shares was lawful, devoid of any illicit intent, and aimed at improving the company's governance structure for its benefit, a point that has now been conclusively affirmed.