Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Outgoing POSCO chairman under probe
POSCO Group Chairman Choi Jeong-woo speaks during a regular general meeting of POSCO Holdings shareholders at POSCO Center in Seoul in this March 2023 file photo. Courtesy of POSCO Holdings
By Park Jae-hyuk
Questions raised over hidden intention behind investigation
The outgoing POSCO Group chairman and nonexecutive directors of the steelmaker’s holding company are under investigation, due to a seven-day trip to Canada they took last August, which cost 680 million won ($517,000), according to the police and the company, Friday.
Internal directors of POSCO Holdings, some of whom are said to be on the list of the next chairman candidates, are also among the 16 people under the police probe, as they also joined the trip.
Considering the fact that POSCO Group is in the process of selecting its next leader, however, some industry officials view the latest investigation as part of the government’s attempts to urge the nation’s fifth-largest business group to appoint an administration-friendly chairman.
The probe began after a civic group referred the POSCO Holdings board members to the Seoul Central District Prosecutors’ Office last month, alleging that they caused damage to the company by playing golf and sightseeing in Canada under the pretext of holding a board meeting there. The civic group consists of residents of Pohang, North Gyeongsang Province, who has asked POSCO Group to deploy its holding firm’s employees in Seoul to the southeastern port city housing its main steel mill.
The Seoul Suseo Police Station has looked into whether POSCO-Canada’s spending of 310 million won and the payment of 20 million won by the group’s steelmaking unit, POSCO, were unlawful and warrant charges of an occupational breach of trust being laid against POSCO Group Chairman Choi Jeong-woo.
Police have also checked whether professors among the nonexecutive directors violated the anti-graft law, given that they belong to the committee recommending the next POSCO Holdings chairman. Each of the outside directors reportedly returned 2.4 million won to the company to avert criticism.
“We will sincerely cooperate with the police investigation,” a POSCO Holdings official said.
POSCO Group Chairman Choi Jeong-woo, front row fourth from left, poses with POSCO Future M employees at the construction site of the battery materials firm's factory in Quebec in this June 2023 file photo. Courtesy of POSCO Holdings
Before POSCO Holdings held the board meeting in Canada, the company invited its nonexecutive directors several times to foreign countries where it has its operations, in order to enhance their business understanding.
The abrupt investigation therefore came as a surprise, raising suspicion that the government forced the POSCO Group chairman to step down. This also reminded industry insiders of the case of KT because the telecommunication firm also replaced CEO Ku Hyeon-mo last year following the prosecutors’ investigation into him.
On Jan. 3, the POSCO Holdings CEO recommendation committee announced that the incumbent chairman is not among the eight company insiders who were selected as the next chairman candidates to undergo reference checks.
The announcement was made after the National Pension Service chairman raised questions about the fairness of the process of selecting the next POSCO Holdings chairman, considering the company’s CEO recommendation committee consists of outside directors appointed under Choi’s leadership.
Although POSCO was privatized in 2000, the government has continued exercising its influence over the steelmaker and its affiliates through the state pension fund, which is the largest shareholder of POSCO Holdings.
Just like his predecessors who were forced to step down after political turnovers, Choi has faced opposition from the ruling People Power Party, given that he was appointed the POSCO Group chairman under the previous Moon Jae-in administration.
A week after excluding Choi from the next chairman candidates, POSCO Group selected 15 outsiders, including former LG Energy Solution CEO Kwon Young-soo, as chairman candidates to get reference checks. Following the selection of the final one candidate through in-depth interviews, the company will appoint its next leader during the general meeting of shareholders in March.