The Korea Herald


Chaebol seethe at Seoul’s control drive

By 김지현

Published : April 27, 2011 - 20:16

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The country’s corporate giants appeared to be inwardly seething over the latest remarks from a presidential aide who said public funds should play a bigger role in promoting corporate governance by more proactively exercising their shareholder rights.

Samsung Electronics, which Kwak Seung-jun mentioned as one company that needs to see more of its shareholders taking control, refused to comment, saying it had nothing to add.

Most other companies also chose to remain mum, but the silence seemed strained, industry watchers said, noting that executives, among themselves, were voicing concern and anger.

“It’s election time again, and the government seems to be out to make sure that it has the voters on its side by bashing the corporate sector,” said one industry source who declined to be identified.

Next year, South Korea will be electing its next president for a five-year term.

On Tuesday, Kwak, head of a presidential council on future growth and vision, irked corporate leaders at a policy forum with a speech urging shareholders like the national pension fund, which has the second-largest stake in Samsung Electronics, to exercise their rights to keep companies in check.

He mentioned Shinhan Financial as well, criticizing the state-run pension fund for failing to speak up when a scandal shook the company last year despite that the fund holds a 5 percent stake as the second-largest shareholder.

The Federation of Korean Industries immediately issued a statement denouncing the remarks, along with the Korea Employers Federation and other top groups representing Korea’s largest corporations.

One executive at a local conglomerate said the groups spoke for them when they said it was not the public funds’ role to try and improve corporate governance, but rather, to help maximize company value.

Experts also spoke up.

“(Kwak’s speech) is an indication that the government is out to control the corporate sector, and does not really have any concerns for shareholder value,” said Kim Chung-ho, president of the Center of Free Enterprise.

What Kwak said was not too unfamiliar, given the recent squabble between former prime minister Chung Un-chan and Samsung.

Chung, head of a blue ribbon committee on mutual growth, said companies needed to share superfluous profit with their smaller partners.

Samsung Electronics Chairman Lee Kun-hee scoffed at the idea, saying he never heard of such ideas.

The Lee Myung-bak administration has been avidly promoting fair trade and social justice during the final years of the presidential term.

On the business side, the initiative involved urging bigger companies to support their suppliers and smaller vendors.

So far, Cheong Wa Dae has declined to step in, saying Kwak’s remarks were “personal views.”

But corporate sources criticized this line of logic, pointing that Kwak had participated in Tuesday’s forum as head of the presidential council, and not as a disinterested individual.

By Kim Ji-hyun  (