Hyundai Motor share values fell on Monday after local authorities launched an investigation into three of its affiliates for suspected tax evasion.
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Reuters said parts maker Hyundai Autonet dropped to its lowest level since October 2005 after Hyundai Motor announced the tax probe on Saturday, which is tied to the February conviction of group chairman Chung Mong-koo over breach of trust and embezzlement of company funds.
Chung was then handed a three-year prison sentence that he is in the process of appealing, with the South Korean government now investigating whether affiliates of the Hyundai Motor Group evaded taxes as part of that case, the report added.
“The probe is a follow-up action after the court found the chairman guilty. We have no choice but to wait for a conclusion by the tax authorities,” Hyundai spokesman Jake Jang told the news agency, declining to elaborate.
Reuters said the tax probe involves Hyundai Autonet, car shipping affiliate Glovis and unlisted construction affiliate Amco.
“Hyundai Motor has already undergone a prosecutor investigation and been under court trial. The tax evasion news comes in the middle of those developments, so that’s nothing new,” Kim Yong-soo, auto analyst of SK Securities, told Reuters, adding: “It (the tax probe) will not dent its corporate fundamentals, but will have a sentimental impact on the stock temporarily” although he noted the situation could change should the tax probe widen in scope.
Reuters said that, by last week, shares in Hyundai Motor have dropped 31.5% since the beginning of 2005 as the country’s biggest vehicle maker and flagship unit of the Hyundai Motor Group has been hit by sluggish sales, a surging South Korean won and strikes by its unionised workers.
Analysts reportedly say it could have bottomed out, the report added.
