The ruling Uri Party and the Fair Trade Commission have held ruling party-government discussions in which they decided to ease restrictions on investments among conglomerates. It is one thing if they decided to have the restrictions not apply to the four state corporations that have been privatized, like Posco, and have no owning tycoon, but it is a typical case of turning back progress made in jaebeol reform for allowing Daewoo Construction and five other companies that were revived with public funds investment at time of sale.
Recognizing exemptions for the six companies brought back from the brink with public funds allows jaebeols to purchase them. The regulations are almost meaningless anyway, with so many exemptions, and now they are going to be even less effective. Now that the floodgates are open you might see even bigger exemptions.
This latest move shows you how inconsistent the government is in its approach. The Fair Trade Commission has long said there needs to be restrictions on how much conglomerates may invest for the purpose of control over what his being invested, and not for investment in new and expanding companies. It has repeated calls for improvement in jaebeol ownership structures. Buying those six companies does not qualify as building new or expanded ones, and nothing significant would change about how they're controlled. So essentially the government has flipped its principles on upside down and seriously hurt the argument for cross-investment restrictions.
The government is too simpleminded in its judgment for thinking all it has to do is recover the public funds that went to getting those six companies back on their feet even if it means they are bought up by jaebeols. It has the potential to create a new model for control structures, and yet it is throwing that opportunity away. Officials' heads are stuck thinking from yesteryear which holds that companies have to have individual "owners." If jaebeols are the only answer right now the government should wait until the capital market gains more strength. The six companies are doing just fine with out individual owners, so it is hard to understand why the government is hastily trying to sell them off at the expense of jaebeol reform. You are forced to ask whether we are seeing a repeat of what you saw in previous governments, which would submit to the jaebeols as their terms in power drew to a close.
The Hankyoreh, 3 March 2006.
[Translations by Seoul Selection]
[Editorial] Another Government Surrendering On Jaebeol Reform? |
