Government Impotent in Hyundai CrisisMay 26: “Hyundai must end its family-run management structure - it’s time to clean up their financial crisis. To this end, the group founder should resign from his post as chairman,” says Lee Yong-keun of the Financial Supervisory Commission.
May 27: FSC Director Lee continues his assault on Hyundai after a ministerial level meeting, “The domestic market views the financial deadlock of the two Hyundai affiliates as a symptom of Hyundai’s problems as a whole. Hyundai should expedite its restructuring plans through a reshuffling of management.”
May 28: FSC spokesperson Kim Yong-jae says, “Hyundai must come up with a comprehensive self-help plan by 9:00 p.m.”
May 29: “The government never suggested to Hyundai’s top figures to retire from their managerial posts. Neither did we ask Hyundai to sell off its subsidiaries,” Director Lee says at a press conference.
May 30: “As time goes by, the Hyundai problem, particularly concerning the resignation of honorary chairman Chung Ju-yung, must be resolved. Government is looking for more practical measures from the company, not simply makeshift theatrics,” Director Lee says to reporters at FSC headquarters.
Lee’s comments in the past several days reflected an increasingly impatient government’s belief that Honorary Chairman Chung’s full control of the Hyundai Group had a heavy hand in the nation’s financial jitters.
The government has, from the beginning of the crisis, pushed hard for reforms at Korea’s largest conglomerate, but its warnings had gone largely unheeded. To make matters worse, Hyundai’s four-page report, “Hyundai’s Standpoint,” was a slap in the face to the government and the group’s main creditor bank, the Korea Exchange bank - glaringly omitting any mention of Honorary Chairman Chung’s resignation.
Despite the report, the government seemed to back off from the issue of Hyundai’s management, stating, “Hyundai’s self-help measures seem to be successful.”
The government’s sudden withdrawal as Hyundai’s most vocal critic could be explained by some possible scenarios: It may have been afraid of strong reactions from the domestic market or the administration may have realized the restructuring could have burdened Hyundai on the eve of the historic inter-Korean summit meeting.
Regardless of what the government had in mind when it flip-flopped on its earlier convictions, it should be ashamed of its amateur effort.
An official with a financial service says of the fiasco, “The Hyundai-government standoff revealed the government’s inability to tackle Chaebol problem.”
by Jong Kyong-min