Korea Fair Trade Commission Conducts On-Site Investigation at Yeongpoong Electronics Ansan Plant Over Allegations of Unfair Contracts; 'Third-Generation Owner' Jang Se-jun's Leadership Under Scrutiny?

*This content was translated by AI.

Yeongpoong Electronics, a subsidiary of the Yeongpoong Group, is reported to have recently undergone an on-site investigation by the Korea Fair Trade Commission regarding allegations of violating the Subcontracting Act (Act on Fair Transactions in Subcontracting).

The Korea Fair Trade Commission is understood to have dispatched investigators to Yeongpoong Electronics' plant in Ansan, Gyeonggi Province, from the 10th to the 12th for three days to secure contracts, accounting records, and internal documents. The investigation is reportedly aimed at determining whether Yeongpoong Electronics unfairly lowered delivery prices in its transactions with subcontractors, failed to pay subcontracting fees on time, or established unfair contracts that shifted prime contractor responsibilities onto subcontractors.

According to industry sources, the on-site investigation originated from a dispute with a specific subcontractor. According to Yeongpoong Electronics' 2025 audit report, the company was previously sued by subcontractor Seonggwang Technology for violating the Subcontracting Act. The lawsuit amount was approximately 500 million won, and since court mediation failed, the case proceeded to a full trial. Legal experts suggest that resolving the conflict between the two parties in the short term is unlikely, as the subcontractor chose to pursue legal action despite the deterioration of their business relationship.

Industry sources indicate that this is not the first time Yeongpoong Electronics has faced controversy over violations of the Subcontracting Act. According to a prior warning issued by the Korea Fair Trade Commission, Yeongpoong Electronics was found to have failed to pay 1.91541 billion won in total, including 856.46 million won in bill replacement payment fees and 1.05895 billion won in late payment interest owed to 165 contractors, as revealed in a 2020 written survey on subcontracting transactions. The Korea Fair Trade Commission is understood to have issued a warning in 2021, deeming the company in violation of the Subcontracting Act.

Beyond the moral issue of abuse of power, if the Korea Fair Trade Commission's investigation confirms violations of the law, penalties such as fines could further damage Yeongpoong Electronics, which has been reporting losses.

Yeongpoong Electronics is a company that produces flexible printed circuit boards (FPCBs) used in smartphones and displays. According to public disclosures, Yeongpoong Electronics' sales plummeted from 720.2 billion won in 2022 to 467.2 billion won in 2023, 184.4 billion won in 2024, and 97.5 billion won in 2025. While the company posted an operating profit of 10.6 billion won in 2023, it recorded operating losses for two consecutive years in 2024 (-41.1 billion won) and last year (-35.4 billion won).

Some observers suggest that this on-site investigation has placed the compliance management of Yeongpoong Group subsidiaries under the leadership of Jang Se-jun, Vice Chairman and CEO of Korea Circuit, on trial. Jang Se-jun, the eldest son of Yeongpoong Advisor Jang Hyung-jin, is reported to serve as an internal director at Yeongpoong Electronics, according to the Korea Fair Trade Commission's public disclosure on the status of large corporate groups. He is also understood to be serving as an internal director at Interflex and Terranix. Industry sources indicate that Vice Chairman Jang is leading the electronic components business of the Yeongpoong Group from the forefront.

Concerns also exist regarding moral hazard within the Yeongpoong Group. In 2020, Interflex, a subsidiary of the Yeongpoong Group, was reportedly fined by the Korea Fair Trade Commission after unilaterally canceling a smartphone component outsourcing process, causing hundreds of billions of won in damages to subcontractors. Additionally, there have been controversies over illegal discharge of heavy metal wastewater from Yeongpoong Seopo Smelter, toxic gas leaks, and major accidents including worker fatalities. Recently, the Yeongpoong Group has faced repeated scandals, including severe disciplinary action by the Securities and Futures Commission for violations of accounting standards.

Industry sources predict that if the allegations of Yeongpoong Electronics' violation of the Subcontracting Act are confirmed, controversy will intensify surrounding Vice Chairman Jang's insufficient capabilities in managing subcontractors, ensuring compliance, and implementing internal controls.

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*This content was translated by AI.