Executives of the beverage manufacturer OB, including its representative, have been indicted for failing to pay tariffs amounting to 16.5 billion won while importing malt, the main ingredient for beer.
The Northern District Prosecutor’s Office of Seoul, led by Director General Ahn Kwang-hyun, announced on the 27th that 10 individuals, including the representative of OB and other executives and representatives of partner companies, have been indicted on charges of violating the Specific Crimes Aggravated Punishment Act (tariffs).
Jung, an executive of OB’s purchasing team, was arrested and indicted for leading the tariff evasion scheme. Bae Ha-joon, the representative of OB, along with the vice president of the purchasing team and nine other representatives of companies established by retirees, were indicted without detention. Six companies related to the tariff evasion were also indicted on charges of violating the Specific Crimes Aggravated Punishment Act and the Tariff Act.
According to the prosecution, executives of OB are accused of evading approximately 16.5 billion won in tariffs by purchasing malt that exceeded the company’s allocated quantity through other companies from September 2018 to July 2023.
Beverage companies import most of their malt to produce beer. These companies benefit from the low tariff rate quota (TRQ) system, which allows for a maximum duty-free tax benefit. The TRQ is a system that applies a lower tariff rate to a specified quantity of certain items, with the Korea Agro-Fisheries & Food Trade Corporation (aT) allocating the quotas to applicants.
If malt is imported in excess of the allocated quantity, the tariff rate can increase to as much as 269%. Investigations revealed that OB imported malt exceeding the allocated quantity while using other companies solely for name to evade paying tariffs.
Executives of OB are also accused of evading an additional 800 million won in tariffs by falsely reporting a significant portion of the maritime freight included in the tariff assessment as land freight.
The prosecution has also indicted representatives of companies that only served as namesiding and collaborated with OB. Some defendants are accused of bribing Jung, the purchasing team director who has been arrested and indicted, in order to participate in the tariff evasion scheme.
The Korea Customs Service searched OB’s headquarters in Gangnam, Seoul, in April last year after suspecting that the company had evaded tariffs by importing malt illegally. The customs service referred the case to the prosecution on March 5 of this year, and the prosecution searched OB’s headquarters again on March 11.
A prosecutor noted, “We have deprived the defendants of criminal proceeds through asset preservation measures such as confiscating their assets.” OB stated, “We do not acknowledge the charges against the company and executives regarding tariffs, and we have already ceased the relevant import method in 2023 and completed the payment of related tariffs.”