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Korea University business school dean and civic activist Jang Ha-sung.
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2nd bid to improve corporate governance falls on deaf ears
The dean of Korea University’s business school and longtime civic activist Jang Ha-sung said he again submitted a proposal to Daehan Synthetic Fiber asking the firm to take steps to improve its corporate governance, but has still been met with no reply. Jang is leading a private equity fund named the Korea Corporate Governance Fund, aimed at improving shareholders’ rights and business transparency with the ultimate goal of raising the value of Korea’s firms on the international market. Daehan earlier denied that it had received the first such proposal from Jang.Jang said on Aug. 28, "We again submitted our proposals to Daehan Synthetic Fiber asking to improve its corporate governance. If there continues to be no answer, we will exercise our legitimate rights as a shareholder," suggesting further action could be taken against the company. In an exclusive interview with The Hankyoreh, Jang said he gave Daehan Synthetic a specific timeframe to respond to the fund’s request. Jang has drawn the attention of the financial market, after he acquired a 5.15 percent stake in Daehan Synthetic, an affiliate of Taekwang Group. The fund was initially capitalized at around 120 billion won (US$125 million). "Our first target is to raise 200 billion won. But, if there are visible [positive] results, we will increase capital by as much as 1 trillion won via an initial public offering," Jang said. Responding to criticism that the fund was raised entirely by foreign investors, Jang said, "We asked local institutional investors to join, and the door is still open," referring to the initial reluctance of domestic investors to invest in the fund. Several local investors have expressed their intention to join, and one or two will soon participate, Jang said. Jang said he selected Daehan Synthetic, in which more than 70 percent of outstanding shares are owned by owner-friendly stockholders, as his first investment target. He said he had no intention of acquiring the company. "Instead of fighting with the majority shareholders, we sincerely hope to bring out a win-win result for the company, the market, and the economy,” Jang said. Jang warned Taekwang Systems, which is wholly owned by major shareholder Lee Ho-jin, from purchasing further Daehan Synthetic stock, saying that the transaction might be suspected as being aided along by insider information. After the fund bought its shares of Daehan Synthetic, the company’s stocks have jumped, touching the upper daily limit for a third consecutive day. Other Taekwang affiliate stocks have also been bullish since the share purchase. Responding to the surge, Jang said it showed the market’s trust for the so-called Jang Ha Sung Fund. "In the short term, I’m not sure, but in the long term, the stock price will have a much higher value than the current price," Jang said. "We won’t buy additional stake in Daehan Synthetic,” he added. "The fund is [seeking to improve the Taekwang group], not Daehan Synthetic," indicating the Jang Ha Sung Fund may purchase shares of other Taekwang affiliates. Jang said he set up the fund to show the possibility of raising market value through long-term transparent investment, in the name of improving corporate governance practices. Regarding criticism that it is not appropriate for a minority shareholder activist to lead the fund, Jang said, "I think it’s possible to pursue both public interest and profit. Even if there are temporary conflicts of interest, we will pursue the two things in the long run."
