[News Space=Reporter seungwon lee] The head of a pharmaceutical wholesaler and the presidents of famous domestic medical corporations and university hospitals who exchanged large amounts of rebates through ghost corporations were brought to trial.

On August 18, the Seoul Western District Prosecutors' Office's Food and Drug Crime Investigation Department (Acting Chief Prosecutor Jo Man-rae) indicted 8 people, including Mr. A (67), the representative of a pharmaceutical wholesaler, without detention on charges of embezzlement, violation of the Medical Service Act, Pharmaceutical Affairs Act, obstruction of bidding, and violation of the Act on the Regulation of Concealment of Criminal Proceeds, on charges of providing illegal rebates worth approximately 5 billion won to the family of the chairman of a university hospital by establishing a non-existent shell corporation between 2019 and 2024.

The prosecution's investigation revealed that Mr. A acquired shares in a shell corporation for the family of the university hospital chairman, paid 3.4 billion won in dividends, and registered the chairman's family as false employees, providing them with 1.6 billion won in personal benefits, including salaries, corporate cards, and golf course memberships. The shell corporation was actually a warehouse owned by Mr. A's company, and some of the employees of the shell corporation were also employed by Mr. A's company. The vice president of Mr. A's company was responsible for disbursing funds and approving meeting minutes.

In particular, it was confirmed that Dankook University Foundation Chairman Jang Ho-seong (71) and his father, Honorary Chairman Jang Choong-sik (94), received a total of 1.25614 billion won in rebates from Union Pharmaceutical Chairman Ahn Byeong-gwang. Chairman Jang explained, "I simply lent the money to a close friend and did not spend a single penny myself." Honorary Chairman Jang Choong-sik was found to have received 400 million won in rebates through an advisory contract, but did not engage in any advisory activities.

The prosecution stated that the practice of using shell corporations to provide dividend rebates represents a new criminal method, evolving from the traditional practice of providing cash or gift certificates. They also pointed out that the cross-acquisition of shares in shell corporations evaded regulations under the Pharmaceutical Affairs Act. They also stated that the rebates were used to manipulate university hospital pharmaceutical bids, leading to a bid-rigging scheme worth tens of billions of won, and that this requires recovery measures and strict punishment.

During the bid-rigging process, the hospital's purchasing management team drafted a scenario for the winning bidder, and three pharmaceutical suppliers, receiving rebates, manipulated the competitive bidding according to the scenario and won the contract. As a result, it was revealed that Dankook University Hospital alone received a total of 850 million won in payments to Chairman Jang Ho-seong before and after the 2022 and 2025 bidding cycles.

Founded in 1988, Union Pharmaceuticals is a major pharmaceutical distribution company with sales of 1 trillion won in 2024. It has expanded its influence by supplying pharmaceuticals to major university hospitals. Union Pharmaceuticals Chairman Ahn Byung-kwang is also known for his art collection, his operation of the Seoul Museum of Art, and his role as the elders' chairman of the Yoido Full Gospel Church.

This case began with an internal report in December 2023 and was uncovered through a search and seizure and investigation in January 2025. The prosecution launched a large-scale investigation, uncovering for the first time a new type of rebate scheme between a shell corporation and a hospital.

However, the court rejected the arrest warrants for Chairman Jang Ho-seong and Chairman Ahn Byung-kwang, meaning they will stand trial without detention. The prosecution emphasized, "We will sternly respond to illegal rebate crimes that threaten the quality of medical services and the finances of the National Health Insurance Service, and thoroughly recover the proceeds of crime." 

This incident, by exposing the corrupt practices entrenched in pharmaceutical supply transactions at university hospitals, is expected to serve as a public warning for the practical operation of the competitive bidding system and for ensuring transparency within the medical community.