The Fair Trade Commission had the Korea Development Institute do a study of how much corporate ownership structures have changed, and the results show the effort has been a failure. What you read from the results is that while corporations have been saying they are going to increase managerial transparency, they in fact have no intention of removing the thick curtains that hang between them and the outside.
Internal checks such as the composition and operation of boards of directors received 41 out of a possible 100 points. That is more than the 38 points from the same study two years ago, but it would still be embarrassing to call it "improvement." The selection of 81.6 percent of registered officers and external board members is done by the chairman or his "restructuring headquarters." That is no surprise, since as the expression goes, all you have to do is to look at one thing among ten and you know the rest. With the situation being what it is you wonder if maybe it is inevitable that boards are just rubber stamps when the major shareholder gets to have his way with the company.
The same goes for external checks such as the public disclosures and external audits that would increase transparency. The programs score 92 points, higher than for advanced nations, but in actuality they only operate at a level that wins 43 points, the same as in the two year-old study. That is largely because companies either make public disclosures without including key information and a problematic climate in which the major shareholder is not properly held responsible even after causing the losses. Investors and minor shareholders still feel a major wall in the way they trying to keep controlling shareholders responsible for their mistakes.
The corporations take every chance they get to demand that jaebeol policies such as the restriction on cross-investment be eased, saying corporations are unable to invest, but the right order of things would be for them to improve their ownership structures. If they do then those policies would have less reason to exist, and the expression "anti-business sentiment" would disappear naturally. The problems at the Samsung and the family feud at Doosan– which is about to go before the courts – all originated in the fact that any checks that exist did not function adequately and because management has not been transparent.
The Hankyoreh, 3 November 2005.
[Translations by Seoul Selection]
[Editorial] Long Road Ahead for Corporate Reform |
