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Oh Keo-don's nephew's company, Daehan Steel, acquires stake in Lotus One, a company owned by Chun Doo-hwan's in-laws

[비즈한국] It has been confirmed that Daehan Steel084010 has purchased a 6.25% stake in the limited liability company Lotus One. Daehan Steel is a company owned by the family of Oh Keo-don (77), the former Mayor of Busan, and its largest shareholder is the former mayor's nephew, Oh Chi-hoon (50), the CEO of Daehan Steel. The former mayor was also a major shareholder of Daehan Steel in the past but sold all of his shares in 2019 after a conflict of interest controversy arose. Currently, CEO Oh Chi-hoon holds a 22.49% stake in Daehan Steel. Combined with the shares held by CEO Oh Chi-hoon’s family and specially related persons, the total stake is 47.54%.

The largest shareholder of Lotus One is Daesan & Company, with a 30.62% stake. The largest shareholder of Daesan & Company is Lee Hee-sang, former chairman of the Donga-One Group, who holds a 48.95% stake. The remaining 51.05% of Daesan & Company is held by parties specially related to the former chairman. In essence, the former chairman controls Lotus One. The former chairman is well-known as the in-law of the late Chun Doo-hwan. The former chairman's eldest daughter, Lee Yoon-hye, is married to Chun Jae-man, the third son of Chun Doo-hwan.

Former Mayor Oh Keo-don once held significant influence within the Democratic Party of Korea. He is the only person from the Democratic Party camp to have served as Mayor of Busan. There was even a political faction centered around him in the Busan region. A company operated by the family of this former mayor has now acquired a stake in a company belonging to the in-laws of Chun Doo-hwan, who represents the opposing political spectrum. However, the former mayor resigned from his post as Mayor of Busan in 2020 following sexual harassment allegations. He was subsequently sentenced to three years in prison in 2021, and it is considered that his political career has effectively ended.

Setting aside political inclinations, Daehan Steel's acquisition of a stake in Lotus One is difficult to understand. In its quarterly report, Daehan Steel stated that the investment was for simple financial purposes. However, Lotus One does not conduct any business of its own. Since it does not conduct business, it generates no revenue. Lotus One's 2023 revenue was 0 won. It is difficult to expect an increase in corporate value or dividends.

Lotus One is, however, the largest shareholder of the U.S. wine company 'KODO, Inc.', holding a 30.30% stake. It is known that if the shares of parties related to former Chairman Lee Hee-sang are included, this figure exceeds 50%. KODO had previously established a subsidiary in the U.S. called 'Dana Estates'.

There has been speculation regarding Chun Jae-man's involvement in the management of Dana Estates. Chun Woo-won, the grandson of Chun Doo-hwan, claimed on social media (SNS) in 2023, "(Chun Jae-man) operates a winery in Napa Valley, California," adding, "A winery is a field of business that cannot be entered unless one has astronomical amounts of money. It smells like dirty money." The winery pointed to by Chun Woo-won is Dana Estates. However, it has not been publicly disclosed whether KODO still maintains Dana Estates as a subsidiary.

Lotus One does not receive dividends from KODO. Other than KODO, Lotus One does not own any corporate entities. Lotus One is merely a legal entity created for former Chairman Lee Hee-sang to own KODO; it has no business of its own, nor does it have any dividends or financial income.

Daehan Steel's operating profit fell by 73.76% from 103 billion won in the first three quarters of 2023 to 27 billion won in the same period of 2024. Amid deteriorating performance, the company spent 1 billion won to acquire a stake in Lotus One, which has no revenue. It is also difficult to envision gaining management control with the 6.25% stake in Lotus One acquired by Daehan Steel.

Bizhankook contacted Daehan Steel to hear their position on this matter, but could not get in touch. We also did not receive a response to inquiries sent via email.