FKI’s final destination yet to be made clearThe Federation of Korean Industries, a business lobbying group that represented the chaebol for over half a century, is going through an existential crisis.
The federation has been under mounting pressure to disband itself after it was directly implicated in the political corruption scandal that led to the impeachment and removal of former President Park Geun-hye. The federation played a leading role in forcing major conglomerates to cough up funds for two foundations established by President Park’s friend Choi Soon-sil.
It has also been suggested that it transform itself into a think tank similar to the Heritage Foundation in the United States.
But while waiting to be reborn, the organization seems to be withering away.
Under revitalization plans unveiled March 24, the federation was supposed to “root out” the backroom dealings between the government and businesses and slash its entire organization and budget by 40 percent. It vowed to be “reborn into a new organization that contributes to national economic growth” by changing its name to the Federation of Korean Enterprises (a literal translation from the Korean; an official English name has yet to be confirmed).
The organization’s 23 teams under seven divisions will be shrunken to six teams under a single division. The federation also established a new unit called a management board to make key management decisions. Two floors of the four-story building it owns in Yeouido, western Seoul, will be rented out.
On April 13, the federation began accepting voluntary retirements from its 180 employees, including 50 researchers at the Korea Economic Research Institute, for the first time since 2003. Some 30 are expected to leave. Remaining employees will see their salaries reduced by up to 30 percent.
Such major restructuring is necessary because the federation has lost key chaebol members. Samsung, Hyundai Motor, LG and SK - Korea’s top four conglomerates - all departed in the wake of the scandal, meaning the federation is no longer receiving nearly 35 billion won ($31 million) a year in funding from five of the key members - 70 percent of the federation’s annual budget of 50 billion won.
Although the management says the pain of the restructuring must be shared by all, the federation’s ordinary employees are disgruntled.
“It’s true that the FKI has long been the link between the political and business communities,” said an employee. “But it’s the people at the top that have been committing the wrongdoings. Yet we have to take responsibility.”
Some analysts say the federation will be forced to be shut down by the new administration elected next month. Several presidential candidates have pledged to do so if they are elected on May 9.
In the meantime, the federation’s outgoing Vice Chairman Lee Seung-cheol, who is known to have been actively involved with the fund-raising for the two foundations, has stirred controversy after demanding a hefty 2 billion won in severance plus a new role at the federation as a full-time adviser. Lee has been working there since 1999.
The federation said on Monday it won’t accept his demands.
“We may consider whether or not to give him the severance pay after the organization is normalized,” said Kwon Tae-shin, vice chairman and CEO of the FKI. “But it’s impossible at this moment. If he files a suit against us and wins, we will be forced to do so.”
BY SEO JI-EUN [firstname.lastname@example.org]