Once-mighty FKI may go extinct

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Once-mighty FKI may go extinct

In the wake of a scandal involving President Park Geun-hye’s closest aides and the Korea Federation of Industries, Korea’s largest business lobbying group, is in a tight spot.

The FKI hurriedly dismantled two private foundations earlier this month: the Mi-R Foundation and the K-Sports Foundation. Fund-raising from big business groups for the foundations are at the center of a scandal that has led to calls for the dismantling of the FKI itself.

“We have reached a point where it’s hard to figure out what the FKI is responsible for,” said the chairman of a major conglomerate on the condition of anonymity.

Ten Korean academics - both conservative and liberal - told the JoongAng Ilbo the FKI should either be dissolved or radically overhauled. The FKI in its current state is “inappropriate,” many said.

Professors who believe the organization should be dissolved said the lobbying group has lost the ability to “purify on its own.”

Kim Woochan, a professor at the Korea University Business School, says the FKI has evolved through the years in three stages.

In the first stage, the federation made a tangible contribution to the Korean economy by managing a back-scratching alliance between industry and the government. In the second stage, it represented the interests of the conglomerates. In the third, the federation lost the ability to serve as the mouthpiece of Korea’s chaebol.

It has now become the “enemy of economic democratization,” says Kim, contending that the group should be scrapped.

Jeong Tae-heon, professor of Korean history at Korea University, says the federation has failed to improve itself “quality-wise” since its establishment in 1961, adding it has even intervened in the dispute over government-issued history textbooks, which is hardly an issue for Big Business.

One option being discussed is the FKI disbanding itself. If that is impossible, the federation could morph into the kind of an organization that deals in future visions for the Korean economy, similar to Rockefeller Foundation or Carnegie Foundation in the United States.

Kim Kwang-doo, head of the Institute for Future State, a conservative think tank, says the federation’s members - Korea’s mightiest conglomerates - made laudable contributions to economic development during the early stage of Korea’s industrialization. But the FKI now only degrades the image of the chaebol.

As an alternative to shutting it down, Kim proposes the FKI merge with its own Korea Economic Research Institute to become an economic think tank like the Heritage Foundation in the U.S.

Kim Sang-jo, chairman of the civic group Solidarity for Economic Reform and a professor of economics at Hansung University in Seoul, suggests the Korea Chamber of Commerce and Industry, an older business lobbying group, absorb the FKI.

The Institute for Future State and Solidarity for Economic Reform issued a joint statement Oct. 4 to urge the FKI to disband on the grounds that it is only harming it member companies, hinders national economic development and is incapable of reforming itself.

On the other hand, Hong Ki-yong, head of the department of business administration at Incheon National University, claims the organization is still necessary.

“The FKI has made enormous contribution to Korean economic development,” he said. “I would like to praise its achievement rather than blame it. Even though its fund-raising for the scandal-ridden foundations does not fit its own purpose, we should consider the fact that political power has interfered in many of its management decisions.”

Hong said the sight of major chaebol chairmen having to attend Blue House events with name tags on their chest or being humiliated for business wrongdoings at a parliamentary hearings shows how rough the government rides Big Businessmen. Once branded by the government, a company may find it very difficult to land business deals or proceed with projects.

Conglomerate heads have been increasingly disinclined to take part in FKI events because they ended up sucking up to the president and other politicians. They have been very reluctant to assume the chairman post at the federation, once a position of high prestige. The chairmanship was unfilled for seven months after Hyosung Chairman Cho Suk-rai stepped down for health reasons in July 2010. GS Chairman Huh Chang-soo took over in 2011 and has renewed his term two times because no one wants to replace him.

The FKI’s top decision-making body, consisting of the chairman and 19 vice chairmen, gets together every two months but it’s hard to spot heads of top conglomerates at the meetings. Meetings are mostly led by executives who come on behalf of their chairmen and crucial decisions are left to Lee Seung-cheol, vice chairman and CEO of the FKI, who has no corporate post.

Lee Phil-sang, adjunct professor of economics at Seoul National University, said that even though the FKI has been playing a less constructive role, a congregation of conglomerates could serve as an asset for the economy and society.

“The organization should take the scandal as an opportunity to examine itself,” he said.

The FKI is currently preparing to come up with a reform plan after prosecutors investigate the two foundations, according to one of its executives.

BY CHOI JOON-HO, SEO JI-EUN [seo.jieun@joongang.co.kr]
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