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Hong Won-sik, the former chairman of Namyang Dairy Products (Photo = Yonhap news) |
[Alpha Biz= Reporter Kim Jisun] Hong Won-sik, the former chairman of Namyang Dairy Products, was arrested on November 28 on charges of embezzlement, breach of trust, and false advertising, among other allegations.
Nam Cheon-kyu, a judge at the Seoul Central District Court, issued the arrest warrant, citing concerns over possible evidence tampering. The same reasoning was used to grant the arrest warrant for a former Namyang Dairy researcher, identified as Park, who is accused of accepting tens of billions of won in kickbacks from suppliers.
Hong is alleged to have caused over KRW 10 billion (approximately USD 7.5 million) in damages to Namyang Dairy by facilitating unnecessary transactions involving companies run by his relatives. He is also accused of receiving significant kickbacks from suppliers in exchange for business deals. Additionally, prosecutors claim Hong misused company funds, including appointing a supplier representative as an auditor for Namyang Dairy, then reclaiming the auditor's salary and using a corporate credit card for personal expenses.
Prosecutors also tied Hong to the 2021 "Bulgari Scandal," where Namyang Dairy falsely advertised its yogurt product, Bulgari, as effective in preventing COVID-19. They allege that Hong ordered evidence, including incriminating mobile phones, to be destroyed by throwing them into the Han River.
In the wake of the Bulgari controversy, which led to consumer boycotts and police investigations, Hong announced his resignation as chairman in 2021. He initially agreed to sell his family's 53% stake in Namyang Dairy to private equity firm Hahn & Company but later reneged. However, following a Supreme Court ruling in January 2024, he was compelled to transfer management rights to the buyer.
After new management took control of Namyang Dairy, the company filed complaints in August against Hong and three former executives, accusing them of embezzlement and accepting bribes under the Act on the Aggravated Punishment of Specific Economic Crimes. Prosecutors are also investigating allegations that Hong's family misappropriated company funds.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
