According to South Korean media Newssis, current and former directors of South Korean tobacco company KT&G have been sued by activist fund Flashlight Capital Partners (FCP). They allegedly caused the company to lose more than 1 trillion won ($748 million).
KT&G's position is that "the contribution of treasury shares is a legal procedure and is for the company's social contribution activities and employee welfare."
Previously, FCP sent a request to initiate a director liability lawsuit to the chairman of KT&G’s audit committee, the contents of which are as follows. The survey targets 21 former and current internal and external directors, including Baek Bok-in, the current president of KT&G.
If KT&G does not file an action to hold the directors accountable within 30 days of the date of receipt of the request, FCP may initiate a shareholder representative action.
FCP claims that since 2001, Bai Furen and other board members have caused damage to the company by donating 10 million KT&G treasury shares to foundations and funds for free instead of increasing shareholder value through cancellation and sale.
In response, KT&G said in a statement, "In order to fulfill its corporate social responsibility, the company donated part of its treasury shares to improve the welfare of public welfare enterprises and employees."