LS Group to shutter JS Cable unit
LS Group, the nation’s largest cable manufacturer, yesterday said that it will shut down its affiliate, JS Cable, to take responsibility for last year’s nuclear reactor corruption scandal.
JS Cable, which LS Group acquired in 2005, was at the center of a nuclear power shutdown that led to nationwide power shortages last year. The company was accused of fabricating test results and supplying poor quality cables. It is facing lawsuits from the Korea Hydro and Nuclear Power Corporation.
JS Cable and another of the group’s affiliates, LS Cable, were among eight businesses fined by the Fair Trade Commission last year for fixing prices of cables supplied to nuclear reactors.
LS Group, the nation’s 16th-largest conglomerate, said that the decision is part of its plan to take moral and social responsibility for the scandal. JS Cable has been one of the group’s solid affiliates, raising sales of 582 billion won ($546 million) and an operating profit of 13.1 billion won in 2012.
“We acquired JS Cable, which has specialty in vessel and offshore special cables, to become an integrated cable company in 2005, but the nuclear power business faced a quality problem,” the company said in a release. “By closing JS Cable’s businesses, we ask forgiveness to people for our illegal action and hope to clear concerns about nuclear power.”
LS Group, which holds a 69.9 percent stake in JS Cable, said that it will buy the rest of the shares for 6,200 won per share before delisting the company from the stock market in a bid to prevent damage to minority shareholders. The stock price of JS Cable was 5,300 won per share as of yesterday.
Even though JS Cable will close, LS Group said that it will provide employment for 300 JS Cable workers, while carrying out payments and supplies for existing contracts.
After the shutdown of JS Cable, LS Group also said that it will donate 100 billion won for research and development and safety technology development to help Korea’s nuclear power plant business. The conglomerate said that it is talking with related organizations and experts to discuss when and how the fund should be used.
LS Group said that it formed a quality safety committee and recruited third-party experts to take special management training and conduct inspections to enhance its products’ safety and credibility.
Industry insiders said that the measure is the commitment that LS Group Chairman Koo Ja-yeol announced in his New Year message. Koo emphasized law-abiding management, saying that the group will not tolerate any illegal or unfair actions. LS Group said that it has created a law-abiding index and has applied it to its employee evaluation program.
“Everyone knows that one person’s or division’s illegal action can determine the fate of the company,” the company said in a release. “We will learn from this incident and will never commit the same action again.”
BY JOO KYUNG-DON [firstname.lastname@example.org]