Shinsegae's Chung to give up board seats
By Rachel Lee
Chung Yong-jin
Shinsegae Group Vice Chairman Chung Yong-jin will give up his seat on the boards of the group and its retail chain E-mart next month, Shinsegae said Wednesday.
The move comes amid an escalating prosecution investigation into allegations of the group’s illegal inter-affiliate transactions and monitoring of unionized workers.
The 44-year-old vice chairman is now facing his biggest crisis ever in his managerial career.
The group said two other Shinsegae board members will resign, along with Chung. The group’s President Kim Hae-sung, CEO Jang Jae-young and Executive Vice President Kim Goon-sun will replace them.
For E-mart, President Kim and E-mart CFO Park Joo-hyung will join the board. Hur Inn-chul will remain in his position as CEO of E-mart.
Vice Chairman Chung was appointed as a board member to the group and E-mart inc March 2010 and May 2011, respectively.
The change of board members will be approved at a shareholders’ meeting slated for March 15, the group said.
Chung’s departure is triggering speculation that he is attempting to evade responsibility for the investigations haunting the retail giant. Some market insiders cautiously predict that he will become the next conglomerate leader in trouble following Hanwha Chairman Kim Seung-youn and former SK Chairman Chey Tae-won, who recently received jail sentences for embezzlement.
With regard to his resignation, the group said Tuesday that it has considered this matter since 2011.
“Chung’s resignation has nothing to do with the recent investigations,” a company spokesman said.
On Feb. 5, Chung was summoned for questioning by the prosecution over the company’s alleged unfair inter-affiliate trading.
The questioning came after a civic group filed a complaint against Chung and two other executives of E-mart last October for alleged breach of trust.
The complaint followed the Fair Trade Commission’s imposing of a 4-billion-won fine on Shinsegae and E-mart, saying the two companies applied lower sales commission rates than legally permitted for the bakery chain, Shinsegae SVN, while allowing the bakery operate at Shinsegae department stores and E-mart stores nationwide. The amount of their financial aid reached 6.2 billion won.
The ongoing investigations of Shinsegae demonstrate a toughening stance by the government and law enforcement authorities on crimes and ethical violations committed by chaebol owners and their offspring.
E-mart has been accused of having spied on its workers and used their resident registration numbers to check whether they had joined a union. Civic groups claimed the firm carried out illegal surveillance in violation of the Personal Information Protection Act. In response to the allegation, the Ministry of Labor extended a special inspection period on the firm to Feb. 15 from the previous scheduled end date of Jan. 25.