Conglomerates under pressure to clean up their act

Korean tycoons including Hur Chang-sooof GS, Choi Tae-won of SK, Koo Bon-moo of LG, Lee Kun-hee of Samsung participated in the Bluehouse conference. Bluehouse Press Corps.

Blue House conference seen as a start in the right direction

At a May 24 Blue House conference on cooperation between large conglomerates and small companies, attention was instead focused on the recent controversy over illegal management practices at the large firms.

With the arrest of Hyundai Motor Corp. chairman Chung Mong-koo on charges of using illegal slush funds, and with the prosecution investigating several of the other firms, a highly-charged atmosphere was anticipated at the meeting. "This is reportedly a meeting for coexistence and cooperation, but all the groups are in agony after the Hyundai Motor incident erupted," a high-ranking official of one of the firms said.

Conference participants included President Roh Moo-hyun and leaders of the large firms, or chaebol, including Samsung, LG, and SK.

Experts predicted that Hyundai Motor Corp., the nation’s top automaker, would attempt to recover its reputation through the meeting.

Lee Jeon-gab, vice chairman of Hyundai Motor, took part in the meeting on behalf of chairman Chung. Hyundai Motors has been weighing its timing in requesting the court to allow Mr. Chung to be released on bail ahead of his first trial. It will reportedly submit a written application to the court soon.

Samsung chairman Lee Kun-hee represented his company, which had promised to donate 800 billion won to society and to set up an independent ombudsman to oversee company operations after accusations of managerial wrongdoing. Samsung hoped that Mr. Lee’s participation in the meeting would shake off some of the ill will felt toward the company, but difficult tasks remain. The Hyundai Motor scandal raised controversy over transfer of managerial control, at a time when prosecutors haven’t yet finished investigation on Samsung Everland’s illegal transfer of wealth.

As part of its pledged donation to society, Samsung gave away the Everland shares previously owned by the chairman’s youngest daughter, who committed suicide last year. But this was controversial because she had been offered the shares unlawfully.

Other conglomerates said they would try to make a new start by utilizing a more cooperative form of management. These firms include KCC and SK, which has been under a cloud for accumulating wealth using unlisted companies.

The Federation of Korean Industries said, "I hope cooperative management and increased investment on the part of the larger companies enhances collaboration and strengthens corporate competitiveness, leading to the mutual development of conglomerates and smaller companies."