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Controversy Over Rising Internal Transactions at UN Engineering, a Company Owned by the Son-in-Law of Former SK Networks Chairman Choi Shin-won

[비즈한국] An investigation by Bizhankook has revealed that UNADigital, a telecommunications equipment supplier led by CEO Koo Denis (Korean name Koo Bon-chul), the son-in-law of former SK Networks001740 Chairman Choi Shin-won, is in a position where it cannot sustain itself without work from the SK Group. UNADigital owns UN Engineering as a subsidiary, which generates over 90% of its revenue through contracts with SK. The reason CEO Koo had previously avoided controversy regarding "tunneling" (the practice of funneling work to affiliated companies) from SK Group is that, while he is the son-in-law of Chairman Choi Shin-won, the "same person" (de facto controller) of SK Group is Chairman Chey Tae-won, meaning Koo does not fall under the scope of relatives defined by the Fair Trade Act.

UNADigital, led by CEO Koo, is an SME established in August 2004 that has been supplying telecommunications equipment to companies including SK Telecom017670 for over 20 years. Although it was incorporated as an SK Group affiliate in 2010 when former Chairman Choi Shin-won purchased its shares, the company was excluded from the group in 2015. This followed controversy over "tunneling," as internal transactions reached 96%, leading CEO Koo and his uncle, NHV Korea Chairman Koo Ja-kyum, to buy back the shares from the former chairman. At the time, there was also controversy that the company's shares had been sold at an undervalued price. Currently, CEO Koo holds a 49.7% stake.

Bizhankook’s investigation revealed that SK Group, which had reduced its transaction volume following the tunneling controversy, has again increased its volume of work for UNADigital (Related article: UNADigital, Sold by Former SK Networks Chairman Choi Shin-won to His Son-in-Law—What About Tunneling Now?). It turns out that 96% of the revenue of UN Engineering (formerly U-Bins), a subsidiary in which UNADigital holds a 98.05% stake, comes from internal transactions with SK Group. Until its independence in 2005, UN Engineering was a business unit responsible for the installation and maintenance of telecommunications repeaters for SK Telesys.

The revenue and transaction amounts between UN Engineering and SK Group are as follows. Revenue: 143.5 billion won in 2018, 132.9 billion won in 2019, 115.1 billion won in 2020, 107.7 billion won in 2021, 115.8 billion won in 2022, and 130.3 billion won in 2023. Internal transaction amounts: 67 billion won in 2018 (46.68%), 123.3 billion won in 2019 (92.77%), 108.1 billion won in 2020 (93.91%), 102.8 billion won in 2021 (95.45%), 110.5 billion won in 2022 (95.42%), and 125.6 billion won in 2023 (96.39%). This suggests that the internal transaction ratio has been maintained at over 90% since 2019. In particular, it was found that more than half of these internal transactions with SK Group originate from dealings with SK Broadband.

The issue is that despite the high volume of transactions with SK Group, CEO Koo, the son-in-law of former Chairman Choi Shin-won, skillfully evades the Fair Trade Act. The "same person" of SK Group is Chairman Chey Tae-won, a cousin of former Chairman Choi; because CEO Koo is a fifth-degree relative by marriage, he is not considered a "relative" under the Fair Trade Act.

Regarding the surge in transaction amounts between SK Group and UN Engineering, an SK Group official stated, "There are no issues under the Fair Trade Act, and the company was simply selected after undergoing proper deliberation. From the perspective of companies like SK Broadband, the transaction volume is not considered large."