Hanwha Tax Evasion Probe, Camera Division Implicated

By IPVM Team, Published Mar 19, 2019, 12:05pm EDT

A Hanwha group subsidiary was raided as part of a tax evasion probe. While a Korean news media report listed the raided entity as 'Hanwha Techwin', Hanwha Techwin claimed to IPVM that "it is related to Hanwha Aerospace, not Hanwha Techwin."

In 2018, Hanwha's security group was spun out as Hanwha Techwin.

Inside this note, we examine the case, feedback from Hanwha Techwin and the potential risk for the companies.

Update: New Korean prosecution statement implicates the camera division, contrary to what Hanwha Techwin tells us.

News ******

*** ***** ****** ****** News ************** ** ***** *, 2019 ****:

*********** ****** ** ********* of ***** ***** ****** conglomerate ****** ***** ** Wednesday ** **** ** a ***** **** *** evasion ***********.

*** ****** **** **** relates ** * **** ********* of ~$** ******* *** tax *******:

*** ******** *** ****** filed * ********* ** 2017, ********** **** ******* Techwin *** ****** ********* taxes ***** **** **** 12 ******* *** (**$**.* million). 

Hanwha ******* ****** ***********

****** **** *** **** report ** ***** ** confusion ***** *** *******'* recent **** *******, ****** another ****** **** ****** [link ** ****** *********] on *** *** ***** stating

*** *********** ******** *** Hanwha ******* (********* ****** Aerospace)

****** ******* (*.*., ********) says **** ** ****, Hanwha ******** *** ********* where ********* ********* ****** Hanwha ******* (******* ** mind **** ******* **** was *** ***** *****, whereas ***** ** ****** to **** ********). **** provided *** ********* *****:

****** ******* (*.*. ********) elaborated ****: 

*** *** ************* ***** ** ***** 2017 *** ******** ** organization #* *** ******** at *** ******** ****** division (********* ****** *********).

**** ******** *** ********* chart ******* *** ************ post-spin **** ****** ******* being * ********** ** Hanwha *********:

No ******* 

*** ***** ******* ******** Prosecutor's ****** *** *** respond ** ******** *** comment **** ****.

Risks *** ****** ******* ********

**** ** ****** ******* (security) ** *** ******** involved, **** *** ***** by *** ********* ******, as ***** *** ***** shows), ** ***** ** some ***** ** **** that *******. *******, ** do *** **** ****** about ****** ******** ** economics ** ****** *** much.

Other ****** *** ******

***** * ~$** ******* tax ***** *** * multi-billion ****** ******* ** relatively *****, *** ******* may ** ****. *** example, ** ****, ******* Electronics ******** *** ***** ** * ******* ** $7.5 ******* *** ******* case. ********** ** ****, *** indictment *** *********, ***** Samsung********** *** ***** **** indicted ** ******* *** embezzlement.

Have ***********?

****** *** *** *********** on *** ****** ****, please ******* ** ** info@ipvm.com ** **** ******** to *** ** **** information **** ****** ******* and ******* **** *** Seoul **********'* ******.

Update: ****** ******** **********

* ****** **** ****************** ********** *** ****** division ******** ** **** tax *******:

*** ******** *** ******* seized *** ********* ** which ******* ******* ***** the ******* ****** ******** in **** *** ****** it **** ** ******* Electronics, *** ******* *** prosecution *********** ***** *** tax ************* ** ****.

*** **** **** ****** quotes * ***** ********** saying ** ******* ****** executive **** ** *******:

** *** ************* **** happened ** *** **** of ******* *******. ***** current ****** **********, ***** will ** ** *************

****, ** *** ******, this *** ** *** current ****** ******* ****** / ******** ******** ** unclear.

***** ******* *** ****** to ******* **** **** any ********** *********** ** response ** **** ******.

Comments (7)

The national tax agency filed a complaint in 2017, suspecting that Samsung Techwin had dodged corporate taxes worth more than 12 billion won...

Is that “Samsung” reference just a typo or is the allegation that the underlying activity leading to the complaint in 2017 actually occurred pre-acquisition?

Agree
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Funny

That is from the Yonhap news agency. We do not have any information about when the alleged activity started.

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My question is: by evading these taxes did they put the funds into product development / Wave VMS ,etc and gain an unfair advantage on the rest of the industry from said tax evasion?

$10 million is about 10% of their annual sales so its pretty significant.

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Funny: 3

$10 million is about 10% of their annual sales so its pretty significant.

Their 2018 annual sales are somewhere in the $500 million range, so not that significant. 

Agree: 1
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Funny

I was referring to Hanwha Techwin America. The American division's sales are around $100 mil.

Agree
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Funny

What does the American division sales have to do with a tax probe of the entire company?

Btw, I am not sure what the American division's sales were in 2018.

Agree
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Funny

My question is: by evading these taxes did they put the funds into product development / Wave VMS

Hanwha doesn't develop their Wave VMS.  They license it from Network Optix as it's just an OEM of their Nx Witness VMS.  Same as Digital Watchdog's Spectrum VMS.  

Agree: 1
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Informative
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Funny
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