Market Place

Title A host of business entities charged with illegal distribution of hazardous chemical PHMG
Source Ministry of Environment
Date 2017-02-17 PM 3:08:24 Hit 1161
Contents The Ministry of Environment ("ME," Minister Cho KyeungKyu) identified 33 business entities involved in unauthorized manufacture and sale of the hazardous chemical Polyhexamethylene Guanidine ("PHMG"). These entities allegedly violated the Chemicals Control Act. The case has been forwarded to the Seoul Eastern District Public Prosecutor's Office.

From 2013 to up until recently, these business entities imported hazardous chemicals without notifying ME or skirted the law to manufacture and sell PHMG without seeking certification. The illegal practices of a host of business entities were exposed in the recent crackdown.

In particular, it was found that some distributors falsely reported the concentration of PHMG in the Material Safety Data Sheet (MSDS) to make it appear below the hazard classification criteria and distributed their products as general chemicals, eluding the vigilance of the public servants.

Two types of PHMG ? phosphate and chloride ? are distributed and used in Korea. PHMG-phosphate was uncovered as the cause of the humidifier disinfectant scandal. Since September 2012, mixtures with a concentration of phosphate exceeding 25% were classified as hazardous chemicals; however, with the revision in March 2014, the concentration limit is now set at 1%. Furthermore, with the adoption of the new classification regarding chloride in March 2014, concentration of chloride exceeding 1% will trigger a hazard classification in the mixture.

The recent crackdown exposed the illegal manufacture and sales of a total of 295 tons of PHMG. While phosphate was mostly contained in the antimicrobial finishing agent for textiles, chloride was used as the ingredient for antimicrobial plastics. PHMG used to produce humidifier cleaners has not been confirmed.

Given PHMG's high inhalation toxicity but low dermal irritation potential, ME judged that textiles finished with antimicrobial agents would have had a minimal harmful effect on human skin.

The illegal practices brought to light can be grouped into three types: manufacture and distribution of mixtures containing phosphate imported from China, manufacture and distribution of mixtures containing chloride imported from China, and manufacture and distribution of PHMG-phosphate from domestic sources.

First, the unlicensed manufacturer D diluted hazardous chemicals containing 52% of phosphate imported from China and distributed a total of 8 tons. Another unauthorized manufacturer C imported 13.5 tons of chloride powder from China in May 2014, then sold 61.7 tons of watered down mixture through four distributors.

Manufacturer C did not notify the import of hazardous chemicals nor register as a toxic chemical business entity. Moreover, all four distributors that received products from Manufacturer C and sold to the end clients did not acquire the license to sell hazardous chemicals.

Furthermore, Company O synthesized phosphate from August 2013 and sold 180 tons of chemical mixture with a phosphate concentration of 25% to distributor P without a permit. Distributor P then sold the mixture to a total of 19 suppliers and clients.

Company O was found to be closely linked to Manufacturer S which served as the original equipment manufacturer (OEM) of the large chemical producer K. Mr. A who is the de facto owner of Company O is also the CEO of Manufacturer S, which is under investigation for its illegal practices. Manufacturer S has supplied phosphate to K Chemicals since 2006. Faced business hardship after the investigation, Mr. A established Company O on the same site and appointed his brother-in-law as the CEO in order to continuously manufacture and sell PHMG.

Distributor P was responsible for distributing PHMG supplied by chemical producer K since 2005. To allay the suppliers' concern after PHMG was classified as a hazardous chemical, distributor K manipulated the concentration of PHMG in the MSDS to avoid hazardous chemical classification.

While companies that received PHMG from distributor P were aware of the hazardous nature and had confirmation that identical chemicals were supplied to them, they did not register as a toxic chemical business entity. Moreover, even after the cut-off limit of PHMG was revised to 1%, these companies continued on with their business without obtaining a permit.

Meanwhile, K Chemicals is charged with selling 30 tons of PHMG in stock to three suppliers without obtaining permit after the company closed down the PHMB business in 2013. ME explained that this was the first case in which the illegal distribution network of hazardous chemical was identified through product tracking.

Up until now, public servants have exposed unauthorized business entities that handled hazardous chemicals; however, a thorough investigation of the illegal distribution network in its entirety was beyond their reach. The recent crackdown was the result of close cooperation between relevant divisions and the "Central Environment Crime Investigation Task Force ("the Task Force") launched last February, which involved searching and seizure of evidence. It was found that dozens of business entities colluded to deceive public servants responsible for law enforcement and make an illegal distribution of toxic chemicals.

Despite lessons learned from the humidifier disinfectant scandal, some business entities shamelessly made illegal distribution of PHMG while some large conglomerates did not follow the due procedure. The recent crackdown shows how industry players continue to put profit before public safety.

Director Park Bongkyun from the Chemicals Safety Division of ME explained that "the Task Force played a critical role in uncovering the illegal distribution of PHMG." He added that "building on the recent crackdown, the Ministry will continue to closely work with the Task Force to make a thorough investigation of the illegal distribution of hazardous chemicals."
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