The Doosan group is being overtaken by a fight among its tycoon brothers over management rights. Former CEO Park Yong Oh has submitted to the prosecution a written statement alleging that the new president, Park Yong Sung and group vice president Park Yong Man amassed W170 billion in slush funds over the past 20 years. Doosan was founded 109 years ago. The brinkmanship between brothers is particularly surprising because the country has seen the founder's descendants manage the conglomerate with no major conflicts.
Ordinarily such family problems are not something for others to get involved in. But the disclosures coming from the family that owns one of the top ten jaebeol's in the country are not issues that can just be ignored. The man making the disclosures, Park Yong Oh, is in a position to know better than anyone else what actually transpired while he was CEO for ten years. The prosecution has to engage in a thorough investigation, and it must do that not just to prosecute illegal behavior but to increase confidence in and the transparency of Korea's conglomerates.
Of special note is the fact this is a domestic fight in a jaebeol-owning family. Samsung's owning family once experienced serious strife, and in 2000 there was the so-called "war of the princes" among the Hyundai brothers. We think it happens not exclusively over property. Also related is the chronic disease that is the jaebeol management system, where tycoon families control whole conglomerate groups with small stakes. If you look at the 38 conglomerates subject to mutual investment restrictions, on average owning families possess only 4.94 percent. In the case of Doosan the tycoon family owns a mere 5.2 percent, and yet you have the CEO chosen at a family meeting and the man who was CEO for ten years demand one of the conglomerates subsidiaries be handed over as his own. The third and fourth generation descendants of Doosan's founder have hold on major companies within the Doosan group. You have a conglomerate that (by Fair Trade Commission standards) has 18 subsidiaries being fought over like it is household property by a family that does not even own that much of it. The absurdities of jaebeol management structures exist elsewhere and the problem is not unique to Doosan.
When the rights to managing a jaebeol lie in the hands of a single family and its power goes beyond the value of the assets it holds, it becomes inevitably more likely that there will be fights over who gets to keep it all. One hopes to see the Doosan affair become an opportunity to make jaebeols more transparent.
The Hankyoreh, 23 July 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Doosan Fight is a Jaebeol Product |
