Sleepless Korea Inc.Samsung BioLogics executives strongly denied accusations that they had committed accounting fraud after it received a preliminary notice from financial regulators regarding a suspected breach. They told reporters that they would take an administrative suit against the Financial Supervisory Service (FSS) which announced preliminary findings after a year-long probe that sided with a local activist group questioning the company’s sudden profits after a four-year loss before going public in 2016. Samsung claimed that it has done nothing wrong and did not profit from accounting applications.
The struggle between the FSS and Samsung raises serious concerns for the government’s entire business policy. Since activists have been placed at the helm of economic policies under President Moon Jae-in, the government has slammed big businesses. Meanwhile, overseas activist funds are having a heyday. U.S. hedge fund Elliott is launching a lawsuit against the Korean government for its role in the 2015 merger between Samsung affiliates.
The government more or less has invited in vulture funds. Succumbing to pressure from the Fair Trade Commission, Hyundai Motor announced a multibillion-dollar scheme to simplify cross-affiliate structure. Elliott is aiming to block the deal to draw a scheme that can better benefit its own interest. It demands Hyundai Motor hand out half of its net profit in cash dividends if it wants the fund’s vote of approval for its reorganization plan.
Hyundai Motor and Samsung BioLogics are on their own facing the government as well as speculative overseas funds. The government stays oblivious to the cries of the business community and wants to revise the commerce law that can further empower foreign shareholders.
It is becoming harder and harder to do business in Korea. On top of the higher cost of management due to a slew of anticorporate policies, entrepreneurs also must fret about their ownership. Small merchants and self-employed businesses also are in trouble because they cannot afford the spike in wages. President Moon Jae-in, in his address on Labor Day, said all the fruits of growth should go to the laborers. As a result, the Korean economy is going the opposite direction of the global economy enjoying fast recovery in growth and employment. All the data in Korea — industrial output, investment, employment and exports — have turned negative. The economy cannot run if the corporate sector loses vitality. The government must tend to the economy immediately.
JoongAng Ilbo, May 3, Page 34