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GS Caltex HR Development Center, Controversy Over 'Borrowed-Name Real Estate' Held and Condoned by 4th-Generation GS Owners

[비즈한국] Circumstances suggesting that the GS Caltex owner family held company real estate under borrowed names have been uncovered by BizHankook. It has been revealed that Huh Joon-hong, CEO of Samyang Corp.002170—a cousin of GS Caltex CEO Huh Sae-hong—purchased farmland in his own name, which cannot be acquired by a corporation, while he was serving as the head of the corporate business division (managing director) at GS Caltex, and later sold it back to GS Caltex.

In Saryong-ri, Seorak-myeon, Gapyeong-gun, Gyeonggi-do, sits the HR Development Center and the gymnasium for the Seoul KIXX Volleyball Team, both operated by GS Caltex. In April 2016, Samyang Corp. CEO Huh Joon-hong, cousin to CEO Huh Sae-hong, purchased stakes (448㎡/704㎡) in '769-X Saryong-ri' and '863-X Saryong-ri,' which correspond to the site of the GS Caltex HR Development Center, for 50 million won. In July 2019, he purchased additional stakes (121㎡/704㎡) of the same plots through a public auction. While the auction price was not recorded on the real estate registry, it is known to be around 50 million won.

The land category for '769-X Saryong-ri' is 'paddy' and for '863-X Saryong-ri' is 'field,' both classified as farmland, which cannot be purchased in the name of a corporation. This suggests that CEO Huh Joon-hong, the cousin of CEO Huh Sae-hong, either lent his name to GS Caltex or purchased the land with the intention of reselling it to the company for a profit by using internal information. In other words, the land was purchased for the purpose of 'borrowed-name real estate' or 'speculative pre-emption.'

In fact, GS Caltex purchased the stakes in the HR Development Center site held by CEO Huh Joon-hong in May 2022 for 106 million won, and in August of that year, changed the land use from 'farmland' to 'amusement park.' It is presumed that the land use change took place after the establishment of a district-level planning zone.

The issue is whether the roughly 100 million won spent by CEO Huh Joon-hong on the land purchase (50 million won purchase price + 50 million won auction price) and the 106 million won received from the sale to GS Caltex constitutes a reward for lending his personal name to the company. Experts overwhelmingly believe that the transaction was likely funded by GS Caltex's company money rather than CEO Huh Joon-hong's personal funds, given the burden of property taxes and other real estate-related taxes during the holding period, as well as the risk involved if allegations of borrowed-name real estate by the owner family were to arise.

A business world official who requested anonymity pointed out, "This appears to be a very grave matter where company funds could have flowed into the pockets of the owner family. It is highly likely that CEO Huh Sae-hong, who holds the final decision-making power on such significant matters, approved or condoned this," while urging, "A tax audit regarding this matter must be conducted."

BizHankook inquired about the position of GS Caltex regarding the matter, but a GS Caltex official explained, "The land was purchased with CEO Huh Joon-hong's personal money, and we do not consider it a problem as he was not granted any market profit during the acquisition process by GS Caltex."

It was also discovered that not only CEO Huh but also a Managing Director named Baek, who served as the head of the finance team's capital division at the time, was highly likely involved in the borrowed-name real estate. Managing Director Baek purchased a stake (41㎡/350㎡) in '769-X Saryong-ri' held by Korea Hydro & Nuclear Power for 27.89 million won in February 2021 and sold it to GS Caltex for 29.5 million won in May of the following year. As this is the same plot where CEO Huh Joon-hong held a stake, it is highly likely that internal information was utilized.

Regarding this matter, the same GS Caltex official provided only a brief statement: "It is simply land that Managing Director Baek purchased personally."

When asked whether Chevron, a global company holding a 50% stake in GS Caltex, was aware of this situation, the official stated, "We do not believe this was a matter requiring board approval."

Chevron, the majority shareholder of GS Caltex, is a U.S. oil company that entered the Korean market in 1967 and has maintained a long-standing partnership with the GS Group. In 2019, CEO Huh Sae-hong was absent from a parliamentary inspection citing an overseas business trip; it was later revealed that he had been playing golf abroad on the day of the inspection, which reportedly caused Chevron to express their disappointment to the CEO.