When brotherly love is goneThe Kumho Asiana Group is in trouble.
Park Sam-koo and his brother Park Chan-koo have stepped down as the group’s chairman and the chairman of the group’s petrochemical company, respectively. The junior Park was dismissed and the elder brother has resigned “to take responsibility” for the feud with his brother. A veteran executive has taken over as chairman, but the void left by the departure of the Parks won’t be easily filled. The group’s image has also taken a beating.
Regardless of the real reason behind the change, this is an unfortunate turn of events. Kumho Asiana once prided itself on the brotherly love between its two senior executives.
After founder Park In-cheon, their father, passed away, the brothers took turns leading the family business. They had equal shares in the group. It was a rare sight in corporate Korea, where feuds between fathers and sons and arguments between brothers are almost a constant.
It’s a shame that the Kumho tradition has come to an end. But now, it’s up to the family to resolve the dispute. It’s not for an outsider to decide who was responsible for poor management or who broke his obligation to the family. We’re more concerned about the state of the group as a whole.
When things go awry at the nation’s eighth-largest conglomerate, the economy takes a hit.
Before the dispute erupted, the group wasn’t in such great shape anyway. It is undergoing corporate restructuring under a deal with its creditors to improve its finances. Kumho Asiana has put Daewoo Engineering and Construction, which it purchased three years ago, on the market this year, and is trying to sell off other affiliates such as Kumho Life Insurance. The group has billions of won in corporate bonds to pay off by the end of this year.
We fear that the family’s feud will have an adverse effect on the restructuring process. Kumho Asiana still has a lot of decisions to make. For instance, it has yet to decide whether to sell its 50-percent-plus-one-share stake in Daewoo Engineering, or to sell off the 39-percent stake held by its investors along with managerial rights. This isn’t a decision that should be hindered by a management vacuum.
Kumho Asiana should pause to reflect on the brotherly dispute over management rights that shook it to its core 30 years ago. The priority now should be ending the current feud and installing interim management, because there should never be a void at the top. The group must be prepared for the possibility that its financial situation could deteriorate given investor sentiment and the dent in its corporate image the dispute has created. We don’t want this family feud to result in insurmountable public indignation.