[Editorial] The Doosan Affair and Corporate Ethics

The hidden side of the Doosan group is being exposed bit by bit as two brothers fight over its managerial rights and it leaves the people with a bitter feeling. It shows you how problematic the structure of jaebeols are. The exposures started when former chairman Park Yong O alleged the group had amassed a slush fund. Then there were allegations that Doosan Industrial Development had doctored its accounting records, and now you learn that the group paid W12.8 billion in interest over five years on the W29.3 billion the owning family used in a capital increase at Doosan Industrial Development.

Many among the 28 family members who participated in the capital increase are completely without income, some of them students and full-time housewives. W11.5 billion was repaid recently, and the dominant view is that it was done as soon as it looked like it was going to be public knowledge as a result of the brotherly infighting. Doosan employees were lent company money and made to buy shares that were later entrusted to the company, a method used to further strengthen the owning family's control. The company paid for all of the interest on that, too.

One is forced to think about corporate ethics again. When a jaebeol tycoon who found himself ruined right before the economic crisis was found to have used his company's credit cards to finance his family's living and entertainment expenses overseas, his answer was "doesn't everyone do that?". The use of Doosan funds to pay for interest on a loan to the owning family is an example of the moral laxness that allows one to use company money as petty cash. Naturally you wonder if that only happens at Doosan. You can only hope it is the exception.

It seems it's time to start talking about what chairman Park Yong Sung's next personal course of action is going to be. He has thoroughly connected in the world of big business, and has something like 60 official titles. If nothing else it would be good it he would volunteer to step down from his position as chairman of the Korean Chamber of Commerce and Industry. He claims he is innocent, but the moral injury he suffers as a result of the loan interest case is just too serious. What will they think of Korean companies outside the country when a jaebeol tycoon in trouble for ethical problems represents Korea's business community?

The Hankyoreh, 11 August 2005.

[Translations by Seoul Selection (PMS)]