Chaebol families lower their profiles

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Chaebol families lower their profiles

Doosan Group Chairman Park Yong-maan is the latest chaebol family member to surrender his top executive positions at group affiliates.

Since the beginning of the year, chairmen and vice chairmen of the nation’s leading conglomerates, including Lotte and Shinsegae, have been stepping down from co-CEO positions at affiliates as a way of responding to calls for more “economic democratization,” which target the chaebol and the families that run them.

Some analysts speculate that the founding families are trying to dodge the tightening pressure from the government of Park Geun-hye.

During Doosan’s shareholder meeting on Friday, Park stepped down as CEO of construction equipment affiliate Doosan Infracore. The company will be run by its previous co-CEO and President Kim Yong-sung and newly promoted Lee Oh-gyu. Chairman Park and Doosan Infracore have a long-standing relationship. Park was instrumental in acquiring Doosan Infracore, the former Daewoo Machinery, in 2005. Park was already heading Doosan Infracore when he was named group chairman last April, and he had another year before his term expired as co-CEO.

On the same day, Cho Nam-ho stepped down as co-chief executive officer of Hanjin Heavy Industries and Construction, although he kept his position as chairman.

Earlier this year, Chung Yong-jin, vice chairman of the retail giant Shinsegae Group, stepped down from the boards of Shinsegae and E-Mart. They were positions he held since May 2011.

Retail rival Lotte Group’s Chairman Shin Dong-bin followed suit by resigning as CEO of Lotte Shopping during the company’s shareholders’ meeting on March 22. Shin had been the CEO of Lotte Shopping for the past seven years.

The companies had similar explanations, saying that the chairman or vice chairman was resigning as head of the affiliates to strengthen responsible and independent management.

They argued that high-ranking executives’ decision-making will be strengthened while management efficiency will improve following the moves.

Industry insiders say the main reason for the trend is the growing pressure on chaebol families coming under the rubric of economic democratization, a concept that was emphasized by President Park during her election campaign.

Economic democratization, which is a goal enshrined in the Constitution, has many meanings, but is most frequently used to criticize the chaebol dominance of the economy and their bullying of suppliers, contractors, staff and customers.

“Under the widely spreading economic democratization call, the demand for more responsibility being placed on conglomerates founding families is growing,” said a civic group official. “However, the founding families of conglomerates are trying to dodge their legal responsibilities.”

Chung of Shinsegae has been particularly targeted since the beginning of the year. E-Mart, the discount chain arm of Shinsegae, was accused of illegally obstructing the activities of its labor union while spying on union members. Last month, Chung was investigated by prosecutors for unfair business support to a bakery owned by his sister.

By Lee Ho-jeong []
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