Gov’t to examine chaebol owners for transgressions

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Gov’t to examine chaebol owners for transgressions

Starting today the owners of the country’s leading conglomerates - including Samsung’s Lee Kun-hee, Hyundai Motor’s Chung Mong-koo and Hanwha’s Kim Seung-youn--will be under government scrutiny to determine whether they violated any financial regulations.

The Financial Services Commission (FSC) on Tuesday announced that it will be looking into the controlling shareholders of Korean financial companies under the revised law on corporate governance of financial companies.

The review is expected to take nearly a year as reports will likely be released in May.

The newly revised law, which passed through the cabinet meeting last week, will restrict the voting rights on shares that exceed 10 percent of the majority shareholder for a maximum of five years if and when they are convicted of violating financial regulations including tax and antitrust laws.

Under the revised law, the review of majority shareholders of conglomerates is to take place every two years. Previously, the review was limited to banks but the government decided to extend this to nonbanking financial companies including insurance, credit card and securities companies.

Currently, there are 64 financial affiliates under the conglomerate banners including Samsung Life Insurance, Hanwha Life Insurance and Hyundai Capital under the Hyundai Motor Group. But the nonbanking financial companies that will be reviewed by the government will also include the exclusive financial group Mirae Asset, which recently acquired Daewoo Securities to become the nation’s largest brokerage firm.

Samsung Group chairman Lee Kun-hee is the largest stakeholder of Samsung Life Insurance as he owns 20.76 percent. This makes him a candidate in the government’ eligibility review.

But in the case of Hanwha Life Insurance, Hanwha Group owner Kim Seung-youn does not own a single share. Instead, Hanwha Corp. is the majority stakeholder with 21.6 percent. In such cases, when the majority shareholder of a nonbanking financial company is not an individual but a corporation, the government plans to look into the owner of the corporation that is the largest stake owner of the financial company.

As Kim is the largest shareholder of Hanwha Corp. with a 22.7 percent stake, he will also be under the government’s evaluation.

In situations where ownership is more complicated, as is the case with Hyundai Card, Hyundai Capital and Lotte Group’s financial affiliates, the financial companies will be turning in reports on who their true majority shareholder is by the end of February next year to the Financial Supervisory Services (FSS).

For instance, the majority stakeholder of Hyundai Card is not chairman Chung but Hyundai Motor, which has 36.96 percent. The automaker’s largest stakeholder is its affiliate that specializing in automotive parts, Hyundai Mobis, which owns 28.24 percent. Chairman Chung only owns 3.99 percent. Hyundai Mobis’s majority stakeholder is Kia Motors.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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