Exclusive
Woo Ji-young, second daughter of SM Group Chairman Woo Oh-hyun, resigns as CEO of Taecho E&C amidst KFTC investigation

[비즈한국] It has been confirmed that Woo Ji-young, the second daughter of SM Group Chairman Woo Oh-hyun, recently resigned from her position as CEO of her private company, Taecho E&C. Taecho E&C is currently under investigation by the Korea Fair Trade Commission (KFTC) regarding the private appropriation of corporate assets by the owner family.

Concurrent with Woo’s resignation, Taecho E&C appointed a new CEO—a former construction company finance team lead—and named Cho Yu-seon, CEO of Samra, which serves as the holding company for SM Group, as an internal director. The company subsequently changed its name to HN E&C. Previously, the company absorbed and merged with HN Inc, a construction firm associated with the Pan-Hyundai family.

According to the corporate registry, Woo Ji-young, the second daughter of SM Group Chairman Woo Oh-hyun, resigned as CEO of Taecho E&C on the 28th of last month. Taecho E&C is a construction company of which Woo held a 100% stake as of May this year. Established in July 2017 with a capital of 100 million won, the company was managed by Woo as CEO and her husband, Park Heung-jun, head of the SM Group Management Innovation Division, as an internal director. In addition to Taecho E&C, Woo Ji-young currently holds auditor positions at Samra, the de facto holding company of SM Group, as well as affiliates such as Woobang and Samhwan Corporation.

Taecho E&C filled the board vacancy immediately upon Woo’s resignation. On the 28th of last month, the day Woo stepped down, the company newly appointed Ham Yu-sik, a former finance team leader at Korea Development (now DL E&C001880), as CEO, Cho Yu-seon, CEO of Samra, as an internal director, and an individual named Cho as an auditor. It is confirmed that Park, who had led the company alongside his wife, remains an internal director. Consequently, the number of registered directors at Taecho E&C has increased from just the couple, Woo Ji-young and Park Heung-jun, to four.

One day after the management reshuffle, on the 29th, Taecho E&C changed its name to HN E&C. Previously, on the 27th of last month, it had absorbed and merged with HN Inc, which is classified as a construction firm related to the Pan-Hyundai family. Although HN Inc was a mid-sized construction firm that recorded 263.7 billion won in revenue and 11.9 billion won in operating profit as recently as 2017, it underwent rehabilitation proceedings after recording tens of billions of won in losses due to a liquidity crisis in 2022. Taecho E&C was selected by the court as the final preferred bidder for the company in May last year, with an acquisition price of 15 billion won.

Taecho E&C also laid the groundwork for capital expansion. On the 28th of last month, when the management was replaced, the total number of authorized shares the company could issue was increased from 80,000 to 2 million. Currently, the company has 60,000 shares issued, all held by Woo Ji-young. The number of additional shares available for issuance increased from 20,000 to 1.94 million, creating room for paid-in capital increases and subsequent capital expansion. As of the end of last year, Taecho E&C’s total capital was -300 million won, indicating a state of capital impairment.

Taecho E&C is currently under investigation by the KFTC regarding allegations of private appropriation by the SM Group owner family. The investigation originated from suspicions that Taecho E&C, operated by Woo Ji-young, received unfair support in the form of funds and personnel from SM Group affiliates during an apartment development project in Seongjeong-dong, Cheonan. It is reported that Taecho E&C purchased project land and covered various expenses by borrowing or receiving support from other affiliates; if these conditions were more favorable than standard market terms, it could constitute unfair support or appropriation by the owner family, which is prohibited under the Fair Trade Act.

An official from the KFTC’s Corporate Group Oversight Bureau stated, "It is true that an investigation is underway, but we cannot confirm detailed progress."

In response, an SM Group official said, "There is nothing we can confirm," adding, "Regarding the KFTC investigation, we will be able to state our position after seeing the investigation results."