Suh case may end up like Lone Star fiasco
The introduction of a foreign chief to KAIST resembles that of foreign capital Lone Star Funds purchasing the Korea Exchange Bank (KEB); both actions were intended to encourage the school and the lender to adopt advanced systems but only resulted in dispute and conflict.
KAIST, the nation’s top science university, invited former MIT professor Suh Nam-pyo in 2006 with hopes that the Korean-born naturalized American would upgrade the school with his experience at the prestigious American university.
He has pushed for reforms, implementing a merit-based tenure system for the faculty and a performance-based tuition system for students ― measures which he claimed were needed to strengthen KAIST’s global competitiveness and encourage competition among faculty members and students.
Professors were required to produce a certain number of academic papers and prove their capabilities in order to extend their tenure. If they failed to do so, they had to leave their positions at the school. Students with low academic performances had to pay a certain proportion of their tuition, which was free before Suh took the helm.
After his initial four-year term, Suh was reappointed in 2010. But mounting stress from the professors and students from the competition-oriented measures made them turn their backs on the president.
The revolt strengthened last year after four students killed themselves from the pressure to perform well. This year, another student committed suicide making the total five.
Professors and students claimed Suh didn’t listen to them but just pushed ahead with his strict reforms. He is facing louder calls to step down. But Suh claims he is receiving many supportive emails from professors and students who think KAIST has improved.
In an echoing situation, attempting to advance into the Korean financial market Lone Star Funds, a Dallas-based private equity, purchased KEB in 2003 as the bank was suffering a huge deficit.
The expectation was that Lone Star would relieve the bank’s difficulties and apply advanced financial and management systems.
Instead controversies and suspicions erupted that the buyout fund purchased the bank at a lower-than-market price by rigging stock prices. It was also alleged that Lone Star was ineligible to buy it to begin with, under law.
Earlier this year, Lone Star finally sold its majority stake in the bank to Hana Financial Group.
Criticism was that the foreign fund reaped a huge profit, more than 7 trillion won, by buying and selling a Korean bank. It has lodged lawsuits to demand the Korean tax agency refund tax payments. Since then, Lone Star has been labeled an example of “meoktwi” (eating and fleeing).