Ftc Chief Vows to Continue With Chaebol Reforms
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| Fair Trade Commission (FTC) Chairman Kim Sang-jo speaks during an interview with The Korea Times at the Korea Fair Trade Mediation Agency in Seoul, Aug. 29. / Korea Times photo by Hong In-ki |
FTC chief calls on Samsung, Hyundai Motor to improve governance voluntarily
By Lee Hyo-sik
Samsung, Hyundai Motor and other top family-controlled conglomerates should institute "self-reform" and create a fair, prosperous business ecosystem that also benefits subcontractors and workers who are socially vulnerable, the head of the nation's antitrust agency said.
Kim Sang-jo, since stepping up as chairman of the Fair Trade Commission (FTC) in June, has repeatedly pressed large business groups to reform themselves. In particular, he urged them to voluntarily make their governance structures more transparent, stop undue inter-subsidiary dealings and treat small business partners better.
If not, Kim, nicknamed the "chaebol sniper," has warned the FTC and other government bodies will take the necessary steps to force them to correct their business practices.
"I will patiently wait for large companies to make the necessary changes on their own," the former economics professor and civic activist said in an interview with The Korea Times, Aug. 29.
"We will wait and see what they do for the time being. But it doesn't mean the government will wait forever," the chairman said. "If businesses fail to meet the expectations of society and the market, the FTC and other agencies will step in and force them to do away with their deep-rooted practices, such as the irregular transfer of managerial control within owner families and circular investment among subsidiaries."
At the crossroads
Kim said Samsung Group and Hyundai Motor Group face the biggest crises in their history, calling on Korea's top two business groups to implement drastic changes to remain competitive global players.
"It is not an overstatement to say they are the two pillars of the Korean economy, but now they are in big trouble," he said. "I hope Samsung Group and Samsung Electronics Vice Chairman Lee Jae-yong will take the ongoing legal troubles as an opportunity for further growth."
On Aug. 25, the heir of Samsung Group was found guilty on five charges including bribery and capital flight, over his involvement in former President Park Geun-hye's corruption scandal. He was sentenced to five years in prison.
For the remainder of the year, Samsung Group will not likely make any significant management decisions until the Supreme Court decides Lee's fate, according to Kim.
He said despite the absence of the top manager, Samsung Electronics will run fine thanks to its solid management system.
Still, he expressed concerns about other Samsung units, which are less competitive in the global market.
"The thing is nobody told Samsung to abolish the group control tower, but it hastily did so. This will hurt the group for a long time to come," he said. "I have become a diehard Samsung critic, not because I hate it, but because I want it to be better, because if it collapses, the Korean economy goes down with it. Samsung should make decisions to grow its business, not to benefit Lee and other members of the founding families."
Hyundai ownership change
On Hyundai Motor Group, which has been grappling with plunging sales here and abroad in recent months, the FTC chief said the carmaker should accelerate the father-to-son management succession and bring changes to its cross-shareholding structure among its affiliates.
"Hyundai Motor's biggest risk is nobody is doing anything to have managerial control transferred from Chairman Chung Mong-koo to his son Eui-sun. If it just wastes time and does nothing, Eui-sun could end up being like his Samsung counterpart," the chairman said. "I know no one would dare to talk about management succession in front of Chairman Chung. But Hyundai Motor really has to move quickly to improve its governance structure and let Eui-sun assume a more significant role."
Kim said he has told Hyundai's top managers, including Eui-sun, many times to take the necessary steps soon to administer succession for the third generation. He stressed, "If Hyundai Motor waits until Chairman Chung becomes sick as Samsung Chairman Lee Kun-hee did, it will be too late."
Source: https://iwasnotssl-www.koreatimes.co.kr/www/biz/2022/08/488_235731.html
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