|LS chairman Koo Ja-yeol|
LS Group, the nation’s 16th-largest conglomerate by assets, is struggling to contain the fallout from its units’ involvement in nuclear power plant-related corruption scandals.
On Monday, LS Group placed an ad on the front page of the nation’s major dailies under the name of group chairman Koo Ja-yeol, saying that the group would take full responsibility for wrongdoing and inconvenience caused by its affiliate firms and make painstaking efforts to be reborn as a trusted business group.
Prior to the chairman’s message, Koo Ja-eun, CEO of LS Cable & System, a core affiliate of the nation’s top wire and cable manufacturer, made an apology to the public during a parliamentary audit into the firm’s involvement in the nuclear power scandal, last Thursday.
The reason why top management of the group took the frontline in communicating with the public is because public angst against the group is escalating to a boiling point, following another nuclear parts scandal involving JS Cable, owned by LS Cable & System. The company largely caused the delay in the construction of the Shin Kori reactors unit 3 and 4 by supplying faulty control cables, a safety-related component.
In particular, the delay of Shin Kori reactor unit 3 with 1.4 million kilowatt power generation capacity, which was supposed to start operating around August next year, means that Korea is highly likely to go through another power shortage crisis next summer.
Before the latest faulty control cable supply scandal, JS Cable caused the shutdown of three reactors ― Shin Kori reactors unit 1 and 2 and Shin-Wolsong reactor unit 1 ― by fabricating quality certificates on their supplies, while colluding with component verification firm Saehan TEP last May.
LS Group is not the only conglomerate involved in the continued nuclear scandal, involving everthing from price-fixing to substandard parts supply to kickbacks for winning contacts, but LS Group’s involvement is more extensive than other big corporate names like Hyundai Heavy Industries. Besides JS Cable, LS Cable & System and LS Corp., the holding company of the group, was recently punished by the Fair Trade Commission for price fixing caused in bids for contracts with Korea Hydro and Nuclear Power, the state-run nuclear reactor operator.
Witness to the continued involvement of LS brands, the public started recognizing LS as a root cause the for nuclear power scandal.
Company officials said, “The group will punish all executives and employees appear involved in wrongdoing based on the upcoming final investigation briefing on the nuclear scandal by the prosecution. Separately, top management is reviewing follow-up measures for better communication with the public after their apologies through media outlets.’’
Despite the group-level efforts, it is not certain that LS Group can manage to control the fallout from the scandal. The group is expected to take a financial hit as the Ministry of Trade, Industry and Energy and KHNP confirmed they would file damage suits against JS Cable and other LS firms.
Last year, sales of LS Group, which was separated from LG Group in 2003, amounted around 30 trillion won, while its operating profit stood at 800 billion won.
By Seo Jee-yeon (email@example.com