[Editorial] The Doosan Case and Conglomerate Reform

Looking at the results of the prosecution's investigation of the Doosan group, you actually start to feel sympathy for the family that owns it since they had to live in such extravagance. It is sad that while crying out the slogan "global standards," the behavior of the conglomerates remains unchanged. It is frustrating that because of ethical lapses on the part of their owners numerous executives have to go to court and people become unsure about whether to make investments or not.

The family behind Doosan created a false subsidiary through which it created huge slush funds to use as spending money, and they maintained control over the company using borrowed money that was an increase in capital with consideration, on which they even had interest paid, as if blowing their noses without using their hands. Their embezzlement tactics are a typical example of unethical corporate behavior. It reminds you of the owner of one company that went bankrupt, when he shocked people by saying "doesn't everyone do it that way?" in response to criticism for sending money for living and recreational expenses to family members overseas.

All that is the result of the backward, authoritarian use of authority by the owning family and an absence of morality that makes them unable to differentiate between company money and personal assets. One should be careful not to generalize about all jaebeols because of what happened at Doosan, but the reality in Korea is that you cannot say for sure that it is not happening at other conglomerates. It is a reminder of how there remains the need to increase managerial transparency and create healthier ownership and management structures through jaebeol reform. There should of course be no witch-hunts or popular opinion offensives. There has to be a creative policy that can guarantee normal business operations while fixing the problems.

Doosan needs to take what has happened and turn it into a blessing. It would be an example to other conglomerates if it were only to rid itself of the old habits of family management and acquire a desirable management structure. It should not try to evade the immediate situation and just go through the motions as it did 14 years ago in the phenol affair.

The Hankyoreh, 11 November 2005.

[Translations by Seoul Selection]