Reporter's Notebook Namyang Dairy leader's endless greed

Namyang Diary Product Chairman Hong Wok-sik speaks during a National Assembly audit held in Yeouido, on Oct. 5. Korea Times photo by Oh Dae-keun

By Kim Jae-heun

There seems to be no limit to the greed of Namyang Dairy Products Chairman Hong Won-sik.

In his appearance at a National Assembly audit Tuesday, Hong appeared to misleading lawmakers in stating that he was looking for a new buyer for his company, to sell it for the benefit of his employees.

In reality, there are a few things he seems to have neglected to mention, under which industry insiders predict he will hand over the management rights to Namyang Dairy.

First, the new buyer will have to offer a price that Hong is satisfied with. In a previous acquisition deal, Hong agreed to sell off his and his family's 53.08-percent stake in the company to local private equity (PEF) fund Hahn & Company for 310.7 billion won.

However, after it was reported that Hong would resign from his position and the PEF would become the new owner of Namyang, the dairy firm's stock price more than doubled, surging from the 360,000 won range to around 800,000 won. Hong immediately had a “change of heart,” and postponed a shareholders meeting in order to block the sale.

It seems that Hong is finding it hard to give away the company that his father, Hong Doo-young, founded. A number of reports claim that he attempted to add an extra clause in the contract with Hahn & Company to retain executive positions for his two sons, Hong Jin-seok and Hong Bum-seok. This went against his promise made during a public apology May 4, when he said he would not pass Namyang Dairy's management rights on his children.

Hong also reportedly requested Hahn & Company to give his family preferred bidder status if it later decided to resell Namyang Dairy.

The chairman has been making various excuses for not selling his company ― he says he only wants his company and interested parties to benefit by selling it at the “right price.”

But Namyang Dairy's shareholders and franchises seem to be the biggest victims of Hong's scheme. Namyang Dairy's stock price plunged back to the 360,000-won range after it called off stock purchase agreement with Hahn & Company. A large number of the dairy firm's franchises have been facing difficulties after consumers started a boycott against Namyang products, feeling betrayed by the chairman's constantly changing words.

Hong did not mention compensation for anyone losing out from his shenanigans, such as the franchises or shareholders, during the audit. He only repeated that he was looking for a new buyer to increase corporate value and to revive the company's reputation so that the franchises could recover.

In the end, Hong did not answer lawmakers' questions on why the deal failed ― he simply said there was a limit to what he could say due to confidential legal issues.

Hong did not shed actual tears this time and instead seemed to be only acting as though he regretted the cancellation of the deal. A sincere apology would involve not reneging on his promises and actually keeping them. If that does not happen, Namyang Dairy may never have the chance to regain the people's trust.