E-Malt.com News article: South Korea: OB Beer accused of evading 16.5 billion won in tariffs

OB Beer has been indicted on allegations of evading approximately KRW 16.5 billion in tariffs by importing malt through partner companies. It has now been revealed that the transaction method was previously presented at an internal company workshop as a “best practice” for reducing tariffs, News Watch reported on September 1.

The 14th Criminal Division of the Seoul Northern District Court held a trial on August 26 for OB Beer, which was indicted on charges including violations of the Act on the Aggravated Punishment of Specific Crimes (Customs Duties) and the Customs Act. In June last year, the Seoul Northern District Prosecutors’ Office’s Tax Crime Investigation Department indicted OB Beer CEO Ben Verhaert, a vice president in charge of procurement, referred to as A, as well as the company and its partner firms.

Prosecutors allege that OB Beer improperly utilized the FTA Tariff Rate Quota (TRQ) system to evade approximately KRW 16.5 billion in tariffs. The company is accused of structuring transactions so that, although OB Beer was the actual importer of the malt, the partner companies appeared on paper to be the importers, allowing OB Beer to receive tariff benefits.

During the hearing, the court questioned B, a former OB Beer procurement team employee who was also indicted in connection with the case.

B joined OB Beer in 2009 and worked on distribution channel analysis and procurement before leaving the company in July 2021. During his tenure, he was responsible for purchasing malt and other beer ingredients, as well as raw material purchasing agency operations.

According to prosecutors, B attended a procurement team workshop in China in 2017, where he presented the company’s malt-related FTA TRQ operations as a “best practice” for reducing costs.

According to prosecutors, B’s presentation materials stated that Korea’s tariff rate on malt was 30% and that OB Beer was paying more than $20 million in tariffs annually. The materials also explained that FTA quotas for different countries of origin, including Australia, Canada and the EU, were allocated based on the number of applicants and the quantities requested.

As a solution to the company’s substantial tariff burden, B proposed having OBC (Oriental Brewery Co., OB Beer’s English corporate name) involve agency companies in applying for FTA TRQ quotas. Under the proposed structure, an agency would secure FTA quotas that OBC could not obtain, import the quantities contracted by OBC and then resell the malt to OBC.

The presentation stated that the arrangement had saved more than $5 million in tariffs in 2017. It also included simulations of the additional FTA quota that could be secured by using agency companies.

At the hearing, prosecutors emphasized that OB Beer’s use of agencies was a project designed and managed at the company level to reduce tariffs.

Prosecutors asked B, “Ultimately, did you present that agencies could obtain quotas, import malt, clear it through customs and then resell it to OB Beer, allowing OB Beer to significantly reduce tariffs by using the agencies?” B answered, “Yes.”

OB Beer’s attorneys then countered by emphasizing the procedural legitimacy of the tariff-saving arrangement and the company’s alleged lack of awareness that the arrangement could be illegal.

The defense stressed that B had followed the necessary procedures when initiating the transactions, including reporting to the procurement team and obtaining a review from the legal team, and that the legal team had concluded that the arrangement could be implemented. The attorney asked B, “If the legal team had concluded at the time that this type of transaction was highly likely to be illegal, would the defendant naturally have decided not to proceed with it?” B answered, “Yes.”

The attorney also noted that B’s materials stated, in substance, that legal and government-related checks were necessary to ensure that no problems arose concerning the import and resale of grains through agencies. The attorney then asked, “Did the defendant present this as an achievement because he had never even considered that the transaction could be illegal?” B again answered, “Yes.”

The defense further asked whether B had immediately forwarded an opinion concerning the transaction, which he received from an overseas grain exporter around 2018, to OB Beer’s legal team for review. B answered, “Yes.” According to the defense, OB Beer’s legal team subsequently sent B an email stating, in substance, that the risk of violating the law was not significant.

The next hearing in the case is scheduled for September 7.


02 September, 2026