Reconsider commerce law revision
A vice chairman of a family-owned conglomerate company recently came under fire for riding a Mercedes-Benz van to work. The story spread across the Internet and the company explained that the van helped the executive save time on his commute because he could use the bus lane. That was pretty clumsy PR. In the end, the vice chairman had to give up his luxury van due to withering contempt.
There is a similar story involving the late Apple, Inc. chief executive and co-founder Steve Jobs. Jobs reportedly drove around Silicon Valley in a Mercedes-Benz for years without license plates. He was concerned about his privacy. The tech guru was able to drive a plateless car for years without ever getting ticketed by taking advantage of a California regulation that gives drivers six months to get license plates for a new car. He changed his Benz every six months to do it. The media would have had a heyday with such a billionaire corporate chief executive had he lived in Korea.
Anti-chaebol sentiment is getting out of control. It appears that every Korean has been issued a license to kill someone involved with a chaebol or large company, or at least assassinate their characters. The National Assembly is deliberating a bill to revise the commerce law so that companies can separately elect audit board members and outside executives to make decisions apart from the board and introduce cumulative voting in shareholders’ meetings. The bill is aimed at checking unilateral decision-making by large shareholders to protect the rights of minority stakeholders. But it goes against global standards.
The revised law could, in fact, help foreign hedge funds more than local minority shareholders. A decade ago, SK Group and tobacco and ginseng monopoly KT&G came under predatory attack by hedge fund operators Sovereign Asset Management and investors Carl Icahn and Warren Lichtenstein. The foreign hedge funds took advantage of the 3-percent cap on voting rights for a majority shareholder and became the largest shareholders by purchasing stakes in less than 3 percent through various asset funds to take over the Korean companies. If authorities are so proud of the new law, why is the corporate governance regulation restricted to listed companies of assets of more than 2 trillion won ($1.8 billion)? Does that mean that large companies deserve to fall prey to predatory overseas funds? If the purpose is to protect minority shareholders, the law is better suited for companies of less than 2 trillion won.
Unfair business practices and poor corporate governance in large companies must be restrained. But the timing is not good. Large companies still help to run the Korean economy. They are becoming increasingly worn down by various regulations and labor strikes. They hesitate to invest at home and instead go overseas. The new law won’t help achieve the government’s economic agenda.
The revision of commerce law must be reconsidered. Reworking the criminal law is a better aim. Large and small companies have been hurt by a series of arrests of corporate owners for malfeasance. Advanced countries respect corporate decisions, but our authorities uniformly slap malfeasance charges for mismanagement. The losses will be ours if corporate executives give up to avoid vague laws.