[EDITORIALS]Rebuilding trust in businessIt is now only a matter of time before the prosecution issues a subpoena to Hyundai Motors’s chairman, Chung Mong-koo. Despite Mr. Chung’s claim that he knows nothing about the alleged Hyundai Motors slush fund, the prosecution seems to have confidence in its case. At worst, Hyundai Motors stands to lose its chairman.
These are hard times for conglomerates. It was only recently that Samsung had to dole out 800 billion won ($831 million) to social causes in an effort to ease public anger over a recent series of scandals. Doosan and SK have also recently been investigated by the prosecution, for allegedly creating slush funds and for fraudulent accounts, respectively. Ethics, transparency in management and corporate reform seem to have gone down the drain.
Our conglomerates are big; they account for a large portion of our economy. The total sales of the four big conglomerates surpass the sales totals for all of Norway and Greece and is almost as big as total sales by Indonesian companies. The problem, however, is that our conglomerates are also very weak. To exaggerate a bit, these empires could crumble if the prosecution were to simply prod its finger at them. It’s a bit unsettling to point out that should these conglomerates tumble, our economy will shake, our sovereign credit rating will fall and we could have another financial crisis on our hands.
It seems our business owners are doing a poor job of wooing the public. Conglomerate owners claim that their businesses cannot run on tight budgets because of massive foreign investments. However, it has usually been management fraud that has given foreign hedge funds an excuse to sell off their holdings and collect fat paychecks. It hardly seems appropriate for the owners to demand that the government protect them from a “foreign invasion.” Businesses also claim that they need flexibility in employing people to meet the needs of the times, but unless they show more effort in turning temporary workers into regular employees when times are good, they cannot escape the criticism that they are hiring temporary workers only to get cheap labor.
Conglomerates contribute greatly to our overall economy through production, investment and employment. Their role is all the more critical in economically difficult times such as now. It may be belated, but conglomerates must start trying to win back the public’s trust.
Conglomerates, now owned in large part by foreigners, can no longer expect patriotism to protect them from government and public criticism. They must win the hearts of the people by their own actions. The words of Kumho-Asiana’s chairman, Park Sam-koo, ring true: “Businesses should avoid censure,” he said. “They should fear it more than bullets and bombs.”
The only way to survive in the long term is for conglomerates to develop a sense of responsibility equal to their size.