Board of Audit and Inspection: "Lee Dongkwan and Kang Kyungsung Improperly Intervened in YTN Share Sale"

Agreed to sell 29.99%, but Lee Dongkwan demanded sale of entire stake

Kang Kyungsung summoned Hanwha Power KDN and Korea Racing Authority, instructed joint sale of full 30.95% holding

Board of Audit and Inspection: "Infringement of public in

The Board of Audit and Inspection has confirmed that Lee Dong-kwan, then Chairman of the Korea Communications Commission, and Kang Kyung-sung, then Second Vice Minister of the Ministry of Trade, Industry, and Energy, unjustly intervened in the autonomous decision-making process of public institutions during the YTN stake sale under the Yoon Suk Yeol administration. Although Korea Electric Power Data Network Co., Ltd. (KEPCO KDN) and the Korea Racing Authority had agreed to sell only 29.99% of their YTN shares to maximize sale proceeds, then-Chairman Lee demanded the sale of all shares, and then-Vice Minister Kang instructed these public enterprises to do so, resulting in the entire 30.95% stake being sold at once. The Board of Audit and Inspection has forwarded relevant materials for criminal investigation concerning both individuals to the Corruption Investigation Office for High-ranking Officials.

Yonhap News Agency

On September 14, the Board of Audit and Inspection released the results of its audit on the "Sale of YTN Shares." The audit, conducted between April and May of this year, focused on the Yoon Suk Yeol administration's public institution asset efficiency plan and asset sales procedures, prioritizing the contentious issue of the YTN stake sale that had been debated in the National Assembly and the media.

According to the audit results, KEPCO KDN and the Korea Racing Authority, which held YTN shares, agreed in 2023 with the sale manager to jointly sell only 29.99% out of their total combined 30.95% stake. The Broadcasting Act restricts ownership of news channel shares by large corporations and major newspapers to 30%, so by lowering the sale portion to 29.99%, they sought to broaden the pool of potential buyers and maximize returns through increased competition.

In August of that year, the two organizations finalized a joint sale agreement through board discussions, agreeing to sell a total of 12,599,999 out of 13 million shares, excluding 401 shares.

However, the Board of Audit and Inspection found that then-Chairman Lee Dong-kwan stepped in during this process. Between late August and early September 2023, Lee asked then-Vice Minister Kang Kyung-sung to ensure that KEPCO KDN and the Korea Racing Authority sold their entire YTN stakes.

The following day, Kang summoned officials from KEPCO KDN, the Korea Racing Authority, and the sale manager, directing them to jointly sell all YTN shares held by the two institutions at once. Lee also instructed the Korea Communications Commission’s working-level staff to send official documents to the Ministry of Trade, Industry, and Energy, and the Ministry of Agriculture, Food and Rural Affairs, expressing that “it would be preferable to unify the shares and sell the entire amount.” The Board of Audit and Inspection noted that there were no internal reviews or deliberations on this matter within the Korea Communications Commission.

Ultimately, KEPCO KDN and the Korea Racing Authority overturned their prior agreement and the opinions of the sale manager, amending the joint sale agreement in September 2023 to sell their entire 13 million shares, representing 30.95%. On September 21, a notice for open bidding was released with this "sell-all" arrangement.

The Board of Audit and Inspection concluded that this intervention violated the Act on the Management of Public Institutions, which guarantees the autonomous management of public organizations. It stressed that, as a result, large corporations and daily newspapers, which could not hold more than a 30% stake, were effectively excluded from bidding. In fact, only three entities not subject to shareholding limits participated in the competitive bidding held on October 23, 2023, and Eugene ENT, a special purpose company of Eugene Group, won the bid for 30.95% of YTN shares at KRW 24,610 per share, totaling KRW 319.9 billion.

The Board of Audit and Inspection reserved judgment on the "fire sale" allegations raised in the past. It stated that there was no problem with the procedure itself, as KEPCO KDN and the Korea Racing Authority set the reserve price according to regulations and sold shares through a highest-price bidding method. While it acknowledged that, had large companies participated, increased competition might have resulted in a management premium, it was impossible to calculate any additional amount, making it difficult to definitively determine whether the shares were underpriced.

Accordingly, the Board of Audit and Inspection has requested that the Ministry of Climate, Energy and Environment—currently the supervising ministry of KEPCO KDN—and the Korea Communications and Broadcasting Commission exercise caution not to overstep their statutory authority and interfere with public institution decision-making. Separately, on September 11, the Board of Audit and Inspection sent investigation reference materials concerning former Chairman Lee and former Vice Minister Kang to the Corruption Investigation Office for High-ranking Officials.

The legal dispute surrounding the sale of YTN is ongoing. In November 2023, the Seoul Administrative Court ruled to annul the former Korea Communications Commission's approval of Eugene ENT as YTN's largest shareholder due to procedural defects in the "two-person system" vote at the time. Eugene ENT has appealed this decision.

This content was produced with the assistance of AI translation services.