The sorry state of Tongyang GroupTongyang Group Chairman Hyun Jae-hyun and his wife Vice Chairwoman Lee Hye-kyung picked up 4.5 billion ($4.3 million) from the conglomerate’s payroll between January and September this year even as it was sinking in an immense sea of debt.
Hyun received 3.45 billion in wages and bonuses from Tongyang Inc., Tongyang Networks and Tongyang Cement - companies affiliated with the 38th largest chaebol in Korea.
Lee earned 1.08 billion from Tongyang Inc.
The three companies filed for court receivership because of heavy debt in September and October. However, group owners took out handsome amounts from corporate savings even as they took steps to liquidate companies, which ended up causing losses worth billions of won to 50,000 individual investors who were ignorant of their financial state. It turned out that Hyun earned more than 100 times more than the average 32 million won paid out to the group’s employees.
This was discovered only after individual earnings from registered executives who earned more than 500 million won from listed companies were required to be disclosed on Oct. 29.
The fat payout to Hyun would have come from Tongyang Securities’ fraudulent sales of corporate bonds and papers in debt-ridden affiliates to thousands of individual investors. Hyun bowed his head low in a National Assembly hearing and promised to do his best to compensate for losses inflicted on individual investors. He said that he had donated all his wealth to the group to help reimburse investors. Meanwhile, he had taken out investors’ money to fatten his own pocket. His wife secretly withdrew 600 million won from a Tongyang Securities account as well as valuables from the brokerage house’s safe box since some of the units went under court receivership. It is no wonder owner families stay rich even after companies go bankrupt.
Last week, another employee from an Incheon branch of Tongyang Securities committed suicide. His family said he was under heavy pressure after being sued three times by individual investors. In October, a female employee of a Jeju branch also killed herself, leaving a suicide note imploring the group chairman to make up for the losses to investors. Customers turned sympathetic toward employees, urging them to refrain from killing themselves.
It is utterly tragic that employees of the company have to sacrifice their lives for the damage done by greedy and unethical corporate owners. Entrepreneurs should draw heavy lessons on business ethics and management from the Tongyang debacle.