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.
Political backlash against DSME inevitable under Yoon's presidency
President Moon Jae-in, front row center, listens to Daewoo Shipbuilding & Marine Engineering (DSME) CEO Park Du-seon, left, who was a managing director at that time, at DSME's Okpo shipyard in Geoje, South Gyeongsang Province, in this 2018 file photo. Joint Press Corps
By Park Jae-hyuk
New CEO suspected of capitalizing on friendship with Moon's brother
By Park Jae-hyuk
Daewoo Shipbuilding & Marine Engineering (DSME) is expected to be at the center of political controversy under the incoming administration because of the appointment of CEO Park Du-seon on Monday. The new CEO will serve for the next three years as the leader of the debt-ridden shipbuilder which is currently under the government's control.
Earlier this year, state-run Korea Development Bank (KDB), which owns a controlling stake in DSME, failed to sell its shares to Hyundai Heavy Industries Group, as the European Union's antitrust regulator rejected the plan.
The presidential transition committee said Thursday that it decided to request the Board of Audit and Inspection to review the validity of Park's appointment, suspecting him of taking advantage of his friendship with President Moon Jae-in's younger brother. Both Park and the president's brother, Moon Jae-ik, entered Korea Maritime & Ocean University in 1978.
“DSME is a de facto state-run enterprise, because of taxpayers' money worth 4.1 trillion won ($3.4 billion) which was injected into the company and KDB holds more than half of its stake,” Won Il-hee, deputy spokesperson of the committee, said in a press briefing. “In order to draw up recovery plans and survive independently, the company needs to go through painful normalization and hire new management in agreement with the new government.”
Won added that Park took office, even after the Financial Services Commission ordered KDB twice to postpone the appointment of the heads of institutions under the state-run bank's supervision, until the new president's inauguration.
“His appointment was ostensibly approved by a private enterprise's board of directors, but it was a thoughtless and shameless decision which aroused suspicions that someone had the authority to hire him,” the deputy spokesperson said. “The appointment of the man, who is said to be a schoolmate of the president's brother, can be seen as an abuse of authority.”
Cheong Wa Dae, however, denied the transition committee's claim.
“We were surprised by the fact that the transition committee has been interested in the DSME CEO seat,” said deputy presidential spokesperson Shin Hyun-hye. “Amid the shipbuilding industry's recovery, the position should go to a management expert inside the company who can restore its operation as soon as possible. Both the incumbent and the next governments should not be interested in the position.”
The president-elect declined to comment on this issue during his meeting with reporters.
Since the recommendation of Park as the new DSME CEO earlier this month, the main opposition People Power Party (PPP), to which Yoon belongs, had demanded the withdrawal of the decision, claiming that Park's friendship with Moon's brother enabled his rapid promotions.
Rep. Lee Joo-hwan of the PPP said in a press conference on March 24 that Park was promoted three times under Moon's presidency and that he is suspected of having supported the election campaign of Lee Jae-myung, former presidential candidate of the ruling Democratic Party of Korea. The lawmaker also pointed out that the former shipyard director has spent most of his career as an engineer.
“Experts are necessary to improve DSME's financial structure before pushing ahead with its sale once again,” he said. “Executives having expertise in sales and finance should lead the company, but Park is far from such abilities.”
Both DSME and KDB refuted the claim that the shipbuilder's new management is incompetent.
“KDB expects DSME's new management to be comprised of each sector's experts in order to play important roles in improving the company's competitiveness and normalizing its operation,” KDB said in a press release.
In contrast to DSME, Daewoo E&C had appointed Chief Financial Officer Chung Hang-ki as co-CEO, before the builder was sold to Jungheung Group from KDB Investment, a subsidiary of KDB. HMM, which is under control of creditors led by KDB, also gave its top position recently to former Hyundai Glovis and Hyundai Wia CEO Kim Kyung-bae, who has gained expertise in management by assuming multiple important positions at Hyundai Motor Group for about three decades.
According to DSME's regulatory filing, the shipbuilder suffered a 1.75 trillion won operating loss in 2021.