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Rep. Chung Mong-joon, left, of the ruling Saenuri Party, shakes hands with former Prime Minister Kim Hwang-sik at a joint speech session held at the National Election Commission's Gwangjin-gu branch in Seoul, Monday. / Yonhap |
By Jun Ji-hye
Rep. Chung Mong-joon of the ruling Saenuri Party is emerging as a major threat to Seoul Mayor Park Won-soon in the race to be mayor of Seoul as he is beating Park in early opinion polls.
Of course he needs to beat two other rivals before winning a party ticket to compete with Park. However, the biggest obstacle he has to overcome is not the other contenders but his stake in Hyundai Heavy Industries.
Under the so-called "blind stock trust system" detailed in the Public Servant's Ethics Law, he must clarify how to handle his stake.
The law stipulates that high-ranking public officials are obliged not to hold shares worth more than 30 million won ($29,000) in firms considered relevant to their duties.
Chung directly holds a 10.15-percent stake in the company, the total value of which approaches 1.7 trillion won, according to the company.
The son of the late Hyundai Group founder Chung Ju-yung also holds another 7.98-percent stake through Hyundai Mipo Dockyard. He also holds 2.53-percent and 0.65-percent stakes in the shipbuilder through the Asan Social Welfare Foundation and the Asan Nanum Foundation, respectively. Chung is honorary chairman of the two foundations run by the Hyundai Group.
In total, he has a 21.31-percent stake in the shipbuilder.
The law requires high-ranking public officials to sell off the excess of 30 million won within a month after inauguration, or place them under the control of a financial institution supervised by the Ministry of Security and Public Administration.
The institution then takes additional steps to dispose of the shares within 60 days, except in the case that it determines one's public post is not linked to his or her stake in the company.
"If elected, I will sincerely follow any legal process regarding my shares," Chung said.
However, if the financial regulator concludes that his position as Seoul mayor has relevance to Hyundai Heavy, the seven-term lawmaker will have to give up his ownership of the shares.
In that case, the National Pension Service holding a 6.31-percent share as a financial investor becomes the largest shareholder. If foreign companies actively push for acquisition, they would be able to take over control of a company pretty easily.
Former Prime Minister Kim Hwang-sik, who is competing against Chung in the ruling party's primary, claimed that if Chung becomes Seoul mayor and has to sell off his stocks of the Hyundai Heavy, which is also engaged in the defense industry, foreign investors would rush in buying his shares.
"In this case, there is possibility that the company's high-level technology could be leaked to the global market," said Kim.
Insiders said Chung himself seems to believe that he can maintain his stake in Hyundai Heavy if he were elected mayor.
He earlier said, "The company is just a dockyard in another province," indicating that he believes the Hyundai Heavy is unrelated to the Seoul mayoral post.
But Kim's camp stated that President Park Geun-hye's predecessor Lee Myung-bak sold off his all shares of the Hyundai Heavy, worth about 78 million won, when he was inaugurated as Seoul Mayor in 2002, following a decision from the financial institute that his job as a mayor had relevance to the company.
In its press release, the camp tried to suggest specific evidence to prove Chung cannot hold two positions simultaneously, saying the Hyundai Heavy and Hyundai Oilbank, whose major shareholder is Chung, signed 53 contracts with the Seoul city for the past five years in which the latter purchased goods worth about 15.2 billion won.
Chung is said to be preparing for "the worst-case scenario" as well, in which he would have to dispose of his stock.
One of the most forceful alternatives is maintaining his control by donating his shares to the two Asan foundations he controls, analysts said.
Kim, former Supreme Court justice, claims that the lawmaker is avoiding speaking explicitly about job relevancy between Seoul mayor and the largest shareholder of Hyundai Heavy.
"He should say clearly for Seoul citizens as well as himself," he said.
In response, Chung said that Kim should stop negative campaign against him as the former prime minister is just one of the hopefuls of the ruling party's primary, not a member of the financial institute.
Follow Jun Ji-hye on Twitter @TheKopJihye