Civic group mulls suit against Hyundai Motor

By Lee Hyo-sik

Hyundai Motor Group’s 10.55 trillion won bid last week for a prime property in southern Seoul was more than three times the appraised value of the site.

Its closest rival, Samsung Electronics, offered just a little more than 5 trillion won for the 79,342 square meters of land in Samseong-dong, owned by the state-run Korea Electric Power Corp. (KEPCO).

Some civic groups have raised the possibility that the Hyundai Motor Group’s board of directors neglected its duties by approving the bid, saying it had only rubber-stamped a decision made by Chairman Chung Mong-koo and that the purchase was not in the best interests of employees or shareholders.

Its labor union is also protesting the group’s decision, insisting that it paid too much for the former KEPCO headquarters and this caused damage to employees and shareholders.

Solidarity for Economic Reform (SER), a civic group, said Tuesday that it had asked Hyundai Motor, Kia Motors and Hyundai Mobis, which formed a consortium to acquire the KEPCO site, to make public the minutes of their board of directors’ meetings held on Sept. 17, when the consortium made the 10.55 trillion won bid.

It said it would file a complaint with the prosecution against Chairman Chung and the board members, accusing them of breach of trust, if they were found to have harmed the companies or the shareholders.

“We would like to know how the board of directors at Hyundai Motor, Kia Motors and Hyundai Mobis decided to participate in the bid for the KEPCO site,’’ SER policy adviser Chae Yi-bai said. “We will study the minutes of the board of directors’ meeting first. If we find evidence that directors knowingly approved the 10.55 trillion bid even if it could cause significant damage to the company and its shareholders, we will file criminal charges against them.’’

On Sept. 17, shares in Hyundai Motor, Kia Motors and Hyundai Mobis plunged 9.17 percent, 7.8 percent and 7.89 percent, respectively, on the news that Hyundai Motor Group had offered 10.55 trillion won for the property. The stocks have not recovered much since that time.

However, Chae admitted that taking legal action would not be easy because SER had to prove that the companies incurred financial losses as a result of the 10.55 trillion won bid.

“It is hard to tell whether the KEPCO land is worth 10.55 trillion won, because some would say it may be worth that much or more, while others say otherwise. The value of land is very subjective.’’

Hyundai Motor’s labor union has been calling on the management to scrap a plan to acquire the KEPCO site, arguing that the company paid too much.

The management and labor unions have not been able to iron out their differences over wages and other conditions. Unionized workers began a partial strike Tuesday and will continue the strike through Friday.

“The labor union is using the 10.55 trillion bid as leverage in negotiations with the management to extract more concessions. Nothing more, nothing less,’’ said a spokesman for Hyundai Motor, who declined to be named. “Our decision to acquire the KEPCO headquarters went through all proper legal channels. It is nonsense to argue that our board of directors committed breach of trust.’’