POSCO Chairman Kwon Oh-joon abruptly offered to step down Wednesday. Kwon said he made the decision voluntarily for the future of the world's fifth-largest steelmaker with regards to output. The company, too, denied allegations of government intervention as groundless.
Not many industry observers appear to accept this explanation on face value. Kwon, who had nearly two years left before his second three-year term was set to expire, showed a firm determination to continue his job as recently as three weeks ago. However, all eight previous POSCO chairmen have been replaced whenever a new administration took office since its founder, the late Park Tae-joon, resigned amid political strife with former President Kim Young-sam.
Quite a few analysts say such a phenomenon might have been inevitable. The political elite used to replace the CEO of the previously state-run steelmaker regardless of their managerial capability. The handpicked CEOs aroused suspicions of collusion with those in political power, providing apt targets for incoming administrations.
The time has long past to sever this vicious circle. The government has had no stake in POSCO since its privatization in 2000. The National Pension Fund, the world's third-largest with 622 trillion won ($582 billion) in assets, is the biggest shareholder, owning an equity stake in the steelmaker of 11.08 percent. Foreign investors hold a combined 55.9 percent.
The government has no say in the management of private enterprises. Any interventions make it difficult to choose able managers or set up long-term business plans.
If the current practice is left uncorrected, the would-be CEOs of POSCO will peep into the campaign headquarters of presidential candidates, and the collusion between politics and business will continue. It is neither good for business corporations nor helpful for economic and political development.
POSCO is Korea's seventh-largest company, with annual sales of 61 trillion won and a market capitalization of 29 trillion won. Its corporate outlook is not very bright, however, amid fierce global competition and mounting trade protectionism. CEO-related risks will only lead to damage to its employees and shareholders.
It is imperative to create a new pattern, by transparently selecting capable CEOs and guaranteeing the security of their tenure. The Korean people had expected the Moon Jae-in administration would cease this bad practice of regarding former state companies as political trophies.