[Editorial] Stop vicious cycle

By Korea Herald

Kwon quits abruptly as chairman of privatized steel giant for dubious reasons

  • Published : Apr 19, 2018 - 17:59
  • Updated : Apr 19, 2018 - 17:59

It is regrettable that Posco Chairman Kwon Oh-joon failed to serve out his term, as all his predecessors had similarly failed. He offered to resign Wednesday two years before the end of his term for dubious reasons.

He said he would step down voluntarily for the future of Posco. The steel mill dismisses suspicions of government intervention and notes that Kwon himself has mentioned nothing whatever to that effect.

But few would accept such an explanation at face value.

Until recently, Kwon had shown strong will to carry on with his job. In a meeting with reporters on the 50th anniversary of Posco late last month, he elucidated his vision of the company enthusiastically, giving no hint at a resignation.

Restructuring he pushed as chairman has received favorable appraisals. The efforts saw operating profit jump to a six-year high last year from a year earlier.

Considering there are few reasons to speak of for his resignation except outside pressure, a view that some power beyond his control came into play as before is convincing.

The Posco chairman has been replaced each time the administration has changed. All three preceding chairmen after the company’s privatization were reappointed only to step down midway after a new administration took office, as Kwon now has.

All eight chairman from first Chairman Park Tae-joon, who created the world’s fifth-largest steelmaker by output, to Kwon failed to serve out their terms.

Some in business circles point to signs of Kwon’s departure.

Kwon was excluded from a group of business executives who accompanied President Moon Jae-in on his first overseas trip to the US in June last year. He was also not part of the business delegation on Moon‘s trips to Indonesia in November and China in December.

Being left out from such missions is little different from pressure to leave.

Recently, some news media raised suspicions that the Lee Myung-bak administration had been illegally involved in Posco’s resources development projects.

In 2016, Kwon was questioned as a witness by the prosecution over the scandal involving former President Park Geun-hye.

A day before Kwon’s offer to step down, Hwang Chang-gyu, chairman of privatized mobile carrier KT, was interrogated by police over an allegation of his involvement in illegal political donations to lawmakers. Even without direct pressure from the government, Kwon may have felt pressure at the news about Hwang.

If the Posco chairman resigned under influence from above, the issue is nothing to sneeze at.

The Moon administration seemed to break the bad customs of officials failing to complete their terms due to change of government when it recently reappointed Lee Ju-yeol as governor of the Bank of Korea.

But Kwon’s resignation raises questions as to if the Moon administration went back to the same bad practice as previous regimes, even as it vowed to eliminate them.

Now, the vicious cycle that appears whenever a new administration is launched must be broken.

Moreover, the government has no stake in Posco since its privatization in 2000.

Past governments may have applied pressure to the chairman to step down, but that cannot justify the repetition of such an act.

The proprietor of a privatized enterprise is not the government. Yet, if the government intervenes privately in the personnel affairs of a private corporation, it will likely hamper its development and foster cozy relations between business and politics.

Posco has annual turnover of 61 trillion won ($57 billion) and a market capitalization of 29 trillion won, the seventh largest on the Kospi market.

Though it is one of the leading companies in Korea, its prospects are not so bright as global competition is becoming ever fiercer and the tide of international trade protectionism is rising.

If the steel giant staggers due to a sudden resignation of its top manager whenever the regime changes, it will cause a great loss to the national economy.

It is time to build a new practice in Posco.

Posco needs a capable manager and his or her term must be guaranteed if he or she is to achieve excellent results, even after the administration changes. Before everything else, a figure must not be appointed as its leader just for supporting the president.