LG announces separation from business lobby

By Kim Tae-gyu

LG Group announced Tuesday that it will leave the Federation of Korean Industries (FKI), dealing a severe blow to the already shaky business lobby.

LG said in a statement that beginning next year, it would neither pay membership fees to the FKI nor take part in any activities of the federation in line with a previous statement.

After the leaders of top chaebol Samsung Group and No. 3 SK Group stated they would withdraw from the FKI due to its involvement in the Choi Soon-sil scandal, observers say that the organization runs the risks of shutting down.

Even though the second-largest conglomerate Hyundai Motor Group has not made a decision yet, the FKI is already hovering between life and death due to a lack of funds needed for its operations.

The FKI relies mostly on 40 billion won in annual fees from more than 600 member companies with half of the amount coming from the aforementioned four groups.

In particular, Samsung paid around 10 billion won every year to the FKI, which was founded by group founder Lee Byung-chul in the early 1960s.

“As key members of the FKI are ready to withdraw their membership, the chances are that others may follow. Then, it would struggle to stay afloat,” said an industry source, who asked not to be named.

“In addition, it is feared the FKI will lose at least a half of its annual budget next year. It is facing a life-or-death crisis, which may be the worst in its 55-year history.”

The FKI has come under fire for having urged business groups to contribute around 77 billion won to the Mir and K-Sports foundations headed by Choi, now in jail.

In a hearing to investigate the scandal this month, Samsung chief Lee Jae-yong and SK head Chey Tae-won said that their groups would quit the business lobby. Executives of other groups such as CJ also agreed.

The desperate FKI countered that it would come up with a plan to revamp the outfit in time for the general meeting of its members scheduled for next February. But some watchers say that members may leave in droves before the convention.

Even before the scandal erupted, the FKI spent much time in finding its leaders as heads of top chaebol refused to take stewardship of the lobby group.

Currently, GS Group Chairman Huh Chang-soo doubles as chairman of the FKI.

Hur wanted to resign after finishing his two-year terms in 2013 and 2015 but he was practically forced to keep the position because a successor couldn’t be found.