By Kang Seung-woo
The ruling and opposition parties blasted the founder of Lotte Group and his two sons, Monday, saying their deepening succession row is humiliating for the country.
They said such public family feuds have become typical at chaebol, or family-controlled conglomerates, underscoring the need to modernize their corporate governance structure.
"The people are enraged by the Lotte owners family who are engaged in mudslinging without thinking about their responsibility to the economy," said Rep. Suh Chung-won of the ruling Saenuri Party, a close aide to President Park Geun-hye, during a party meeting.
"The group has grown through people's support, but its outdated and opaque management system is not based on common sense. It is an act of betrayal to the people."
He said it is time for the nation to check managerial risks at the country's conglomerates that derive from owner families' outdated thinking and straightening out these problems.
The main opposition New Politics Alliance for Democracy (NPAD) said conglomerates are becoming a risk for the national economy rather than the growth engine the government needs.
"Addressing chaebol problems should be ahead of labor market reform," NPAD floor leader Lee Jong-kul told the members of the party's Supreme Council.
Reforming the nation's stiff labor market is President Park's flagship policy in the second half of the year in order to create more jobs and revive the sluggish economy.
In addition, the government has offered business-friendly economic policies, including low corporate taxation.
"If the Park administration wants to turn around the economy, it should deal with chaebol firms rife with problems rather than holding labor circles responsible for the slow economy," Lee said.
Such a power struggle often occurs due to the opaque corporate governance structure, under which chaebol scions control conglomerates through cross-shareholder structures with a small stake. The Lotte feud is creating a mood in political circles to reform the complicated ownership structure.
"This time, we need to seek measures to improve the outdated corporate governance structure. In addition, the financial authorities need to check if the complicated structure is clearly notified," said Rep. Kang Seog-hoon of the Saenuri Party.
In addition, given that Suh is the leader of lawmakers supportive of President Park, speculation is rife that he is in line with Cheong Wa Dae.
However, some say that the government's involvement should be limited in succession battles by conglomerates.
"Although the Lotte feud looks ugly, there is no legal basis allowing the government to get involved in the row," said Rep. Lee Hahn-koo, another Saenuri lawmaker.
Rep. Chung Sye-kyun of the NPAD said, "While maintaining positive functions from chaebols, the government should urge them to promote fair competition and pursue corporate responsibility."
Bae Jong-chan, the chief director at political pollster Research and Research, said that President Park is not likely to join the chaebol bashing.
"First of all, the Park administration is focused on reviving the economy," he said.
"In addition, chaebol reform will lead to less conglomerate cooperation in Park's project establishing 17 innovation centers nationwide."
The innovation centers that the government believes will help nurture small- and mid-sized firms are sponsored by 17 conglomerates and on July 24 Park urged heads of the conglomerates to show continued support for the centers.
The ruling and opposition parties blasted the founder of Lotte Group and his two sons, Monday, saying their deepening succession row is humiliating for the country.
They said such public family feuds have become typical at chaebol, or family-controlled conglomerates, underscoring the need to modernize their corporate governance structure.
"The people are enraged by the Lotte owners family who are engaged in mudslinging without thinking about their responsibility to the economy," said Rep. Suh Chung-won of the ruling Saenuri Party, a close aide to President Park Geun-hye, during a party meeting.
"The group has grown through people's support, but its outdated and opaque management system is not based on common sense. It is an act of betrayal to the people."
He said it is time for the nation to check managerial risks at the country's conglomerates that derive from owner families' outdated thinking and straightening out these problems.
The main opposition New Politics Alliance for Democracy (NPAD) said conglomerates are becoming a risk for the national economy rather than the growth engine the government needs.
"Addressing chaebol problems should be ahead of labor market reform," NPAD floor leader Lee Jong-kul told the members of the party's Supreme Council.
Reforming the nation's stiff labor market is President Park's flagship policy in the second half of the year in order to create more jobs and revive the sluggish economy.
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In addition, the government has offered business-friendly economic policies, including low corporate taxation.
"If the Park administration wants to turn around the economy, it should deal with chaebol firms rife with problems rather than holding labor circles responsible for the slow economy," Lee said.
Such a power struggle often occurs due to the opaque corporate governance structure, under which chaebol scions control conglomerates through cross-shareholder structures with a small stake. The Lotte feud is creating a mood in political circles to reform the complicated ownership structure.
"This time, we need to seek measures to improve the outdated corporate governance structure. In addition, the financial authorities need to check if the complicated structure is clearly notified," said Rep. Kang Seog-hoon of the Saenuri Party.
In addition, given that Suh is the leader of lawmakers supportive of President Park, speculation is rife that he is in line with Cheong Wa Dae.
However, some say that the government's involvement should be limited in succession battles by conglomerates.
"Although the Lotte feud looks ugly, there is no legal basis allowing the government to get involved in the row," said Rep. Lee Hahn-koo, another Saenuri lawmaker.
Rep. Chung Sye-kyun of the NPAD said, "While maintaining positive functions from chaebols, the government should urge them to promote fair competition and pursue corporate responsibility."
Bae Jong-chan, the chief director at political pollster Research and Research, said that President Park is not likely to join the chaebol bashing.
"First of all, the Park administration is focused on reviving the economy," he said.
"In addition, chaebol reform will lead to less conglomerate cooperation in Park's project establishing 17 innovation centers nationwide."
The innovation centers that the government believes will help nurture small- and mid-sized firms are sponsored by 17 conglomerates and on July 24 Park urged heads of the conglomerates to show continued support for the centers.
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