Orion Group will strengthen its lineup of former officials as outside directors at its annual shareholder meetings on March 26. Following appointees with backgrounds in the Ministry of Food and Drug Safety and prosecutors' offices, it will newly appoint outside directors from the Korea Customs Service and the National Tax Service. With overseas business recently expanding to as much as 60 percent of total sales, the move appears aimed at strengthening tax response capabilities.

The Financial Supervisory Service's electronic disclosure system showed on March 17 that Orion Holdings and Orion will put forward agenda items to appoint a total of 2 new outside directors at annual shareholder meetings on March 26. The outside director candidates proposed by the two companies total 4, with each company naming 1 new nominee and 1 reappointment.

Holding company Orion Holdings plans to appoint Jae-hyun Lim (임재현), a former commissioner of the Korea Customs Service and currently an adviser at law firm Bae, Kim & Lee, as a new outside director. It also plans to reappoint Kyun-mi Kim (김균미), a professor at Ewha Womans University. Lim will newly join to replace outside director Young-gi Kim, whose term expires this year.

If the agenda items are approved, Orion Holdings will have 3 outside directors: Hye-kyung Park, Kyun-mi Kim and Jae-hyun Lim. Park is a former official of the Ministry of Food and Drug Safety.

Orion will bolster its outside director lineup with a former National Tax Service official. As outside director Wook Lee, a former head of the Board of Audit and Inspection's Public Official Inspection Headquarters, completes his term, Orion proposed appointing former Incheon Regional Tax Office chief Hyun-kyu Lee as a new outside director and reappointing Chan-yeop Song, a former chief prosecutor of the Seoul Eastern District Prosecutors' Office.

Hyun-kyu Lee is a tax administration specialist who joined the National Tax Service through a special recruitment as a grade 8 official in 1984. He has served as head of the Investigation Management Division at the Seoul Regional Tax Office's Investigation Bureau 4, director of the Busan Regional Tax Office's Investigation Bureau 2, head of the National Tax Officials Training Institute and chief of the Incheon Regional Tax Office.

If the agenda items are approved, Orion's outside directors will be Seung-kwon Noh, a former chief prosecutor of the Daegu District Prosecutors' Office, Chan-yeop Song, a former chief prosecutor of the Seoul Eastern District Prosecutors' Office and currently a lawyer at Lee & Ko, and Hyun-kyu Lee, a former chief of the Incheon Regional Tax Office and currently head of Arim Tax Firm.

Orion has previously appointed outside directors with National Tax Service backgrounds even after past tax issues, and the latest appointments are interpreted as aimed at strengthening its ability to respond to regulation. It will be the first time in 6 years that Orion appoints an outside director with a National Tax Service background, since Eun-ho Kim, a former chief of the Busan Regional Tax Office. At the group level, with the term of Orion Holdings outside director Young-gi Kim expiring after this shareholder meeting, the National Tax Service-linked outside director role shifts from the holding company to Orion.

Former outside director Eun-ho Kim was appointed in 2016, shortly after a tax audit into alleged tax evasion involving Orion Chairman Cheol-gon Dam and the owner family. At the time, the industry also viewed the appointment as one made with strengthening tax-audit response capabilities in mind.

Orion also underwent a tax audit by the Seoul Regional Tax Office's Investigation Bureau 4 in 2019. At the time, the industry raised the possibility of allegations such as understatement of income and omission of taxes in transactions involving overseas subsidiaries. Considering that Orion's overseas business has recently expanded to as much as 60 percent of total sales, there is a view that the latest appointments aim to strengthen its ability to respond to tax risks, including international taxation and management of overseas subsidiaries.