Infighting at Hyundai ResumesIt’s regretful that the Hyundai crisis has once again turned personal, as members of the Chung family bicker among themselves for management rights. Against Honorary Chairman Chung Ju-yung’s wishes, the Hyundai Motor Company held a board of directors＇ meeting yesterday and agreed to reappoint his son, Chairman Chung Mong-koo.
The recent fiasco brings to mind the ‘War of the Princes’ in March that had the two brothers, Mong-koo and Mong-hun, each with a posse of their closest allies, lock horns over the right to claim the chairmanship of the Hyundai Group.
It is disconcerting that Korea’s largest business group can ignore the interests of investors once again. Considering the fact that the Hyundai crisis has a significant effect on domestic markets and the entire economy, the current conflict must be resolved as soon as possible.
The recent crisis is a hard nut to crack because of the complicated state of affairs within the Chung family. Nonetheless, it is a flawed system that allows for a chairman, an honorary one at that, to decide the resignation and reappointment of a group chairman at his own discretion, without due procedure. It is also a sad reality that the nation’s largest business group has been managed under a family-oriented management system for so long.
There are no laws against the decision made by the board of directors at Hyundai Motors or to govern an owner’s qualifications. There are still questions surrounding Honorary Chairman Chung’s decision to dismantle the top of the Hyundai hierarchy.
However, it is still a shameful scene to see Mong-koo insist, “I cannot resign,” in the face of resignations of the its honorary chairman and two subsidiary chairmen in a bid to save the group from financial ruin. Despite Hyundai’s beliefs, the already tainted reputation of the group’s management is being dragged through the mud by the recent events.
Financial markets have stabilized following the announcement of Hyundai’s restructuring plans, which carried with it the condition that the Chung family would take their hands off the ailing group. Domestic and foreign investors were unanimously positive over the self-rescue package - believing that the plan would “actually be carried out.”
Considering the current circumstances, it’s of no help that the conflict has been prolonged, not only for Hyundai, but also for the Korean economy. The situation must be resolved as soon as possible. However, the focus of the conclusion should not be management rights, but rather, how to increase Hyundai’s competitive strength and regain market confidence.
by Lee Jong-min