The following is the first in a series of articles breaking down the presidential candidates’ major economic pledges in a simulated question-and-answer format by gathering their answers from official websites, media interviews, public speeches, books and more. The first installment delves into proposals on chaebol reform. -- Ed.
The upcoming May 9 presidential election is unusual in the sense that it has been brought forward seven months due to the impeachment of former President Park Geun-hye for her role in the bribery and influence-peddling scandal involving her longtime friend, presidential aides and business tycoons.
Against this backdrop, presidential nominees are vowing to root out the decades-old corruptive ties between chaebol and politics.
Major candidates include front-runner Moon Jae-in of the main opposition Democratic Party of Korea, Ahn Cheol-soo, who plans to step down as a legislator for the centrist People’s Party on Saturday, Hong Joon-pyo of the conservative Liberty Korea Party, Sim Sang-jeung of the minor progressive Justice Party and Yoo Seong-min of the splinter conservative Bareun Party.
The five major presidential candidates for the May 9 election participate in the first TV presidential debate, Thursday. From left are Hong Joon-pyo of the Liberty Korea Party, Ahn Cheol-soo of the People’s Party, Yoo Seong-min of the Bareun Party, Sim Sang-jeung of the Justice Party and Moon Jae-in of the Democratic Party of Korea.(Yonhap)
Four of the major candidates, barring Hong, have issued their own pledges on chaebol reform.
In question-and-answer form, The Korea Herald introduces how the major candidates promise to reform chaebol.
Question: What is your view on chaebol and what kind of reform measures do you propose?
I believe that if we cannot reform chaebol, we cannot seek economic growth. I will strongly push for reform of the top 10 conglomerates and, in particular, the big four groups -- Samsung, Hyundai Motor, SK and LG.
I will urge them to establish a clean and transparent management structure because numerous corporate crimes, such as window dressing, using illicit funds, tax evasion and embezzlement are often committed by family owners of chaebol. I will end the practice of pardoning convicted corporate criminals.
I will impose strict regulations on the top 10 conglomerates that will include limiting their industrial capital from engaging in financial businesses and preventing them from recklessly expanding into sectors that are suited for small firms.
We need to drastically raise the Fair Trade Commission’s authority to have chaebol report their transactions with small- and medium-sized businesses and subcontractors, so that the fairness of such deals can be permanently surveyed and supervised.
To raise chaebol’s managerial transparency, I will introduce a cumulative voting system which would make it easier for minor shareholders to place candidates of their choice in the boardroom if they join forces.
I will also seek to raise industrial electricity bills that have been excessively low for conglomerates. (Compiled from public speech on April 3, interview with Bloomberg in Oct. 2016)
As a self-made venture entrepreneur myself, I basically believe Korean startups and venture firms should lead economic growth. To help them do so, I will reform the entire economic system that has been traditionally favorable toward conglomerates.
First, I will enhance regulations on chaebol’s holding firms. I will make them select an auditor separately from the board of directors to give more independence to the auditor. I will revise laws to introduce a multiple derivative suit system to allow shareholders of a parent company to file a lawsuit against the management of a subsidiary, so that they can keep chaebol power in check.
I will also push the National Pension Service, which is the largest institutional investor for many conglomerates, to actively exercise their voting rights to guard minor shareholders against chaebol families’ unjust influence over companies and restrict excessive increases in executives’ salaries.
I will introduce more stringent punitive damages for economic crimes committed by conglomerates and restrict chaebol family members’ eligibility to become board members if they have criminal records. (Compiled from press conferences at the National Assembly on March 16 and April 5)
I may come from the conservative side, but as an economist-turned-politician, I have reformative measures planned for chaebol. I believe that our market economy should be based on “economic justice” where conglomerates and small firms compete within fair market rules.
I will stop chaebol family owners from unfairly earning profits through internal business activities among affiliates and I will not pardon convicted corporate criminals.
I will also revise laws to root out chaebol’s abuses of power, as they often put unfair pressure on subcontractors and steal their technologies. I will stop their “gapjil,” coercion of firms that are less powerful. (Compiled from his Feb. 14 posting on “fair market economy” on his official website)
I share the other candidates’ views on chaebol reform such as not tolerating any illegal activities by chaebol. As a longtime fighter against Samsung, I want to go further by seeking ways to completely stop a third generation of chaebol families from managing the companies. While other candidates’ chaebol reform measures should go through law revisions at the National Assembly, my focus is rather on declaring a president’s strong will that I will not take care of Samsung’s behind-the-scenes businesses.
I vow to introduce a “corporate split ordering system,” as a last resort, to legally coerce a split of affiliates from a business group if the group abuses its market power and commits an illegal business activity. (Compiled from her official website and interview with the Huffington Post on Feb. 28)
I have not made campaign pledges on chaebol. I said in my book that chaebol should be held accountable for their wrongdoings, but an anti-business mindset does not help boost the economy. Chaebol family’s tax evasions or their second and third generations’ “deviation,” which make the people angry, should be punished. But it is quite contradictory when people voice for anti-business, anti-chaebol actions and still want job creation (by chaebol). (From his book “Hong Joon-pyo Answers” (2017))
By Kim Yoon-mi (email@example.com)