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Five confirmed violations found with Saemangeum wind farm shareholders

By: Kaitlin Walsh 18/11/2022 Ministry of Trade, Industry and Energy

Corporate Windfarms

The Ministry of Trade, Industry and Energy has conducted an investigation into the Saemangeum wind farm in Jeollabuk-do, South Korea. It has been confirmed that regarding the authorization of transfer within the project, there has been five violations: one case of share change non-compliance; two cases of acquisition of unlicensed shares; and two cases of submission of false documents.

The approval of the Saemangeum project was given by the Ministry of Trade, Industry and Energy in December 2015. After this, a power generation business licensee, referred to as "Mr. S", transferred the power generation business right from Company S to Company T, a special-purpose company, in November 2021 after receiving approval from the Ministry of Trade, Industry and Energy. Furthermore, in August 2022, Company J applied for the authorization for stock acquisition from company T in order to acquire management rights for the business.

The Electricity Commission of the Ministry of Trade, Industry and Energy decided to postpone the deliberation regarding Company T's stock acquisition authorization application in September 2022. This is due to reliability issues in application data which raised suspicions, leading to an investigation.

In the case of share change non-compliance, it was found that Company T had shares in multiple companies in which there is confirmation of non-fulfilment of a share structure.

The two cases of acquisition of unlicensed shares involved Company E and Company J. Company E (of which Mr. S is the largest shareholder) obtained the largest shareholder position of a power generation company by securing a 48% stake in Company S without obtaining approval from the Electricity Commission of the Ministry of Trade, Industry and Energy. Company J also obtained the largest shareholder position of a power generation company by securing 84% of Company T's shares, also without the approval from the Ministry of Trade, Industry and Energy.

Finally, the cases of submission of fake documents involved Company S and Company J. Company S submitted inflated pre-development costs when applying for the authorization for transfer of power generation business.

Meanwhile Company J submitted a false description to the Electricity Commission of the Ministry of Trade, Industry and Energy of the size and timing of the stock acquisition.

In addition, it is also confirmed that the circumstances under which Company S applied for the power generation business license was falsely listing the largest shareholder at the time of the permit application.

The the Ministry of Trade, Industry and Energy stated as a result of the corruption that has occurred within the shareholders in this project, it is working towards institutional improvement, such as introducing the prevention of obtaining unfair profits using power generation business rights.

It has not been outwardly stated whether the Saemangeum wind farm project is now cancelled, however it is highly likely the project will be delayed.

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Five confirmed violations found with Saemangeum wind farm shareholders

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