[EDITORIALS]Let Posco steer itselfThe government has repeated its pledge of the highest autonomy for the management of privatized corporations. So the recent comments by a bank president and others, opposing the reelection of Yoo Sang-boo for a second term as Posco’s chairman, makes us wonder if the days of dirigisme in Korea are indeed over.
Our central concern is not whether Mr. Yoo is reappointed to another term. He allegedly used his influence to have Posco affiliates purchase the stock of Tiger Pools, a sports lottery, at a price higher than its valuation. Analysts have expressed concern about moral hazard after Posco’s privatization, with the lack of audits and the absence of an owner-president.
Despite the misgivings, it is still wrong for the government to intervene in the appointment of the management of a company where 90 percent of the shareholders are private citizens. Perhaps it is not really government intervention. But when the deputy prime minister, Jeon Yun-churl, emphasizes that “The office of the chairmanship of a large privatized public corporation stands like a house atop a house,” and the Industrial Bank of Korea and the National Pension Fund state opposition to a second term for Mr. Yoo, what are we to think?
Posco may have begun as a state-owned corporation. But it is the world’s second largest steel mill, and 61 percent of its shares are held by foreign investors. This dictates that management decisions are determined by the shareholders and the market as guided by the law. If management is at odds with the law, the law takes precedence. Thus, it is a misplaced assertion by the government, which holds sway over only 7 percent of Posco shares. Any impact the government has on Posco’s management decisions must be a result of its stake in the firm.
If the controversy stems from the government walking in step with President-elect Roh Moon-hyun, who questions privatization, there is reason to be wary. If the opposition was engineered by Mr. Roh supporters who would like to appoint a new Posco chief, it is all the more reason to be wary.