[SUPER RICH] Living with a secret

By Korea Herald

Chaebol go to great lengths to cover up ‘health risks’ involving owner families

  • Published : May 26, 2014 - 20:48
  • Updated : May 26, 2014 - 20:48
The health issues of company owners have recently, taken precedence above all else in the corporate world following the recent hospitalization of Samsung Group chairman Lee Kun-hee.

From questions regarding who will succeed the Samsung chairman to whether or not other corporations are any better prepared for similar incidents, the corporate sector is astir with gossip.

The company, on the other hand, adamantly denied that Lee was in critical condition, issuing statements that he is on the mend.

The illness of a South Korean corporate leader, or of any major company owner for that matter, is equally ― if not more ― unfavorable and detrimental to the company as a leak of its core technologies or mishaps at its workplace.

This is primarily because in most cases, crucial business decisions, such as large-scale investments, a launch of a new business project or an M&A, are still almost always made by the owner if the founding family still presides over the firm.

Due to such reasons, the health problems of a corporate owner are always a closely guarded secret, meaning a visit to the hospital for the most trifling illness or injury is fiercely put under wraps. 

Court appearances, a trigger for sickness?

Besides Lee Kun-hee, a number of chairmen seem to have been under hospital care recently.

CJ Group chairman Lee Jay-hyun, for instance, checked into Seoul National University Hospital again ― just two weeks after being reconfined ― on concerns of a potential viral infection following his recent kidney operation.

Having long suffered from chronic renal failure, Lee’s conditions deteriorated in 2013 when he was charged with embezzlement and malpractice and had to receive a kidney transplant from his wife during his suspension of execution.

He suffers from a rare degenerative muscle disorder known as Charcot-Marie-Tooth disease.

Hanwha Group chairman Kim Seung-youn was also receiving treatment at SNU Hospital until recently.

While he was sentenced to jail for illegal subsidization in 2013, his diabetes, chronic lung disease and depression worsened and he had to be hospitalized during his stay of execution.

Afterwards, he received further care in the United States in March, then returned to wrap up his treatment at his home, only to leave again for the United States for additional treatment two weeks later.

Hyosung Group chairman Cho Suk-rae also frequented the hospital during the past few years.

He underwent an operation for gallbladder cancer in 2010 and received chemotherapy for prostate cancer early this year.

Meanwhile, former Taekwang Group chairman Lee Ho-jin was diagnosed with stage-three liver cancer in 2011 and is currently awaiting a transplant.

Yet the convenient timing with which the illnesses of these chairmen were revealed inevitably raised suspicions among the public.

Besides Lee Kun-hee, many of these corporate figures have given the impression that they quite abruptly developed major health concerns at times when they were surrounded by corporate scandals and prosecution.

As such, some have raised the question of whether or not they may have feigned illnesses to provoke compassion and pity.

But experts in the medical and business fields explain that this is not necessarily the case.

They say that the chairmen did not “suddenly” become ill, but that their long-undisclosed illnesses merely surfaced.

Because a chairman’s health problems are often dealt with in confidentiality, it is not uncommon for even company officials to find out about them with the rest of the world.

“The post of chairman is one that demands a great deal of stress and worry, and these factors can more often than not lead to some form of chronic illness,” said one industry affiliate.

“Long hours of investigations, trials and imprisonment can easily reveal even the best-kept secrets.”

Guidelines for selecting hospitals and doctors

Corporate leaders who keep a close watch on their health receive regular check-ups at the hospital, up to at least once or twice a year, but also at their homes or offices through family doctors or secretarial staff who have a medical background.

At hospitals, they are indeed treated as VIPs, not simply because they spend a considerable amount of money on private wards and expensive services, but also due to their societal status and influence.

If a treatment or surgical operation goes south and such results become exposed to the public, it can have a tremendous impact on the hospital’s reputation.

“In the case of such high-profile patients, it would be appropriate to say that they are under special care of the director of the hospital,” said an official from a renowned hospital.

Likewise, there are unspoken rules in choosing a hospital to attend.

The Samsung family unsurprisingly prioritizes Samsung Medical Center, while Hyundai Group is known to prefer Asan Medical Center and LG Group to opt for SNU Hospital.

Yet it is not accurate to claim that all affiliated with Samsung visit Samsung Medical Center and all from the Hyundai family go to Asan Medical Center. In fact, at times it is the complete opposite due to the fact that a chairman’s health problems can be abused by a rival company or even his or her relatives.

In reality, there are many occasions when using the same hospital is avoided, especially for corporate groups that have had management-related conflicts between relatives, such as Hyundai.

Medical treatments and surgeries, too, are not assigned to just any doctor.

The process is especially intricate for those who are expected to inherit management rights because, unlike the much older owners in their 60s, hospital visits by successors who are only in their 40s can lead to false rumors that can prove quite damaging to the company.

It follows that there is also a trend among chaebols of opting for medical care overseas ― such as in the United States, Singapore or Japan ― where they may enjoy more privacy, comfort and confidentiality.

Announcing the chairman’s health issues: ‘Buffett’ or ‘Jobs’

A chairman’s health problems are considered a hot topic not only in Korea, but also in the United States and Europe.

In places where ownership and management rights are often divided, such as in the United States, the health of a company’s managing director can be just as significant as its owner’s.

How well a company communicates to the public about the chief executive’s health issues is evaluated as a part of its capacity to cope with risks.

Such was seen through the passing of Apple chairman Steve Jobs.

Although Jobs is remembered as a true innovator, his way of communicating with the public about his health drew much criticism from the media and the market.

Even though rumors about his health concerns tailed him ever since his pancreatic cancer operation in 2003, not once did Jobs openly state his conditions, until he abruptly revealed in 2009 that he needed medical treatment, causing stock prices to plunge.

Warren Buffett, on the other hand, is said to be displaying a model example for communicating his state of health.

In April 2012, he wrote a letter to his investors explaining that he had been diagnosed with prostate cancer.

In the letter he included precise information about his health condition and investment plans, and an assurance that shareholders would be notified immediately if his health were to deteriorate further.

Although he was most likely able to handle it in such a manner because it was not a severe or critical condition, experts say that his confidence and open-mindedness were able to stir faith among investors.

Buffett, who is now has fully recovered and continues to be a prominent investor.

By The Korea Herald Special Investigative Team
― Hong Seung-wan, Sung Yeon-jin, Do Hyun-jung, Bae Ji-sook, Kim Joo-hyun