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Former Taekwang Group Chairman Lee Ho-jin / Newsis

By Park Jae-hyuk

Taekwang Group is facing questions about its plan to invest a combined 12 trillion won ($9 billion) in its manufacturing and financial services affiliates over the next 10 years and hire 7,000 employees by 2032.

The large-scale investment plan was announced abruptly on Monday, in contrast to most other major companies which plan to scale down their operations to brace for a looming economic recession.

Critics called the group's plan unrealistic, pointing out that the hidden intention behind the announcement is to convince the government to grant a special presidential pardon later this year to former Taekwang Group Chairman Lee Ho-jin, the largest shareholder of the group's key subsidiary, Taekwang Industrial, a KOSPI-listed petrochemical and textile company.

Lee was once embroiled in controversy for his allegedly unfair release on bail. He finished his sentence in October last year, after being sentenced to three years in prison for embezzlement and tax evasion. He is banned from participating in the group's management until October 2026, according to the Act on the Aggravated Punishment of Specific Economic Crimes.

"A week ahead of the potential year-end special presidential pardon, Taekwang Group announced its 12-trillion-won investment plan, but its insufficient regulatory filing caused concerns that the announcement was an empty pledge intended for the chairman to be pardoned," five progressive civic groups said in a joint statement, Tuesday.

Given that the size of Taekwang Group's staff stood at around 6,900 workers, all of the group's affiliates would need to grow continuously over the next 10 years in order to fulfill its promise to double the number of employees.

In addition, cash and other cashable assets owned by Taekwang Industrial were worth just 625.1 billion won as of the end of the third quarter, despite the group's plan to invest 10 trillion won in its petrochemical and textile businesses.

Taekwang Industrial has also been suffering cumulative losses since the second quarter of this year. It posted operating losses of 7.9 billion won and 48.1 billion won during the second and third quarters, respectively.

There is also speculation that Taekwang Group's latest announcement of its investment plan is intended to reverse the negative public sentiment toward the company, after Taekwang Industrial surrendered last week to Truston Asset Management, which had urged it not to finance its cash-strapped co-affiliate, Heungkuk Life Insurance.

In response, Taekwang Group explained that it has been preparing for the investment throughout the second half of this year, with a plan to make an official announcement early next year.

"We made the announcement earlier than expected, as the plan was leaked to some news outlets," the company said.

However, the group may still drop its investment plan, as Taekwang Industrial said in its regulatory filing that the plan is subject to change depending on the business environment and management conditions.