Chaebol owners resigning from board

By Yoon Ja-young

Samyang Foods Chairman Chun In-jang

According to Hyundai Motor Group, its chairman Chung Mong-koo is scheduled to resign from the board of the Hyundai Engineering and Construction at the general shareholders' meeting Thursday. The group explained that the chairman wants to concentrate on the automobile business. The group, however, has been facing pressure by the Fair Trade Commission (FTC) that it should improve its corporate governance.

Lee Hae-jin, founder of the country's top portal, Naver, also officially stepped down from its board in February. Speculation was that it had to do with the FTC designating Lee the effective owner of a large company. Once designated as such, a variety of antitrust regulations and duties could follow. Lee could not avoid the designation despite owning only a 4.3 percent stake.

Harim Group Chairman Kim Hong-kuk

Daelim Group Vice Chairman Lee Hae-wook, who is the third-generation scion of the family controlled group, also resigned from being the top executive at the shareholders' meeting last week. He had caused public anger last year for gross mistreatment of his chauffeurs. A number of Daelim executives and employees also made headlines recently for being bribed by suppliers.

At the shareholders' meeting of SPC Samlip scheduled for Thursday, vice presidents Hur Jin-soo and Hur Hee-soo, who are children of group chairman Hur Young-in, are expected to resign as their reappointments are not included on the agenda. The operator of the country's top bakery franchisor Paris Baguette had been in conflict with the government for refusing to directly hire the 5,300 bakers working at the franchised shops.

Daelim Group Vice Chairman Lee Hae-wook

Local poultry giant Harim Group, which was the first target of the investigation by the FTC for unfair practices under the new administration, also had chairman Kim Hong-kuk resign from the board. The company was suspected of using illicit measures in handing over control of the group to the chairman's son.

Samyang Foods Chairman Chun In-jang, who is being investigated by the prosecution for alleged embezzlement, recently resigned from being the CEO. Shinsegae Vice Chairman Chung Yong-jin also has been away from the board for years.

Market watchers say the series of resignations is because the current administration is not tolerating the wrongdoing of chaebol founders and members of owner families, who are trying to keep low key.

Naver founder Lee Hae-jin

The court, for instance, rejected the bail request by Lotte Foundation chief Shin Young-ja, who is a daughter of the Lotte Group founder Shin Kyuk-ho. She has been in jail for embezzlement. She enlisted her daughter as a board member and paid her billions of won in salary, but the court determined that such a practice constituted embezzlement.

“By resigning from the board, the members of the owner families can avoid legal responsibility. They are, however, still controlling the management. It doesn't seem desirable,” an official at The Citizens' Coalition for Economic Justice noted.