Pushing Cho into the grave
The author is a columnist of the JoongAng Ilbo.
The sudden death of Hanjin Group Chairman Cho Yang-ho has evolved into a political debate on whether the state had a part in cutting short the scandal-ridden tycoon’s life. I am on the side that it did.
Under the Moon Jae-in administration, the business community faced multiple headwinds. The playing field was entirely tilted toward labor unions and against conglomerates. Unions walked away with a slap on the wrist for any illegalities while chaebol had to endure penalties and tax raids. The government applied populist rules on companies with little regard for entrepreneurship.
Korean Air was easy prey. A drink-throwing tantrum by one of the heiresses of the family empire led to 18 prosecutorial raids. As many as 11 state offices were mobilized to push the nation’s largest airline and its parent into a corner. The customs office searched the company six times. It did not find sure evidence, yet the court went on granting warrants for search and seizure raids. Korean Air employees said they got used to visits from law enforcement authorities.
Around that time, there was speculation in stock market circles that key policymakers were out to make Samsung Group an ownerless enterprise like Korea Telecom (KT) and could try out their plan on Hanjin Group. The stewardship code campaign led by Jang Ha-sung, the presidential policy chief at the time, and the fair-economy slogan under Fair Trade Commission chief Kim Sang-jo provided justification for attacks on big corporate clans. Cho would not have wanted to believe in this theory since such a move could not be possible in a democratic and capitalist society. He sought advice from veterans from various sectors last fall and told them he would retire from management after serving one more term as chairman of the board.
Cho wished to stay long enough to settle his son in management and, more immediately, play the role of host for the International Air Transport Association Annual General Meeting and World Air Transport Summit in Seoul in June, according to a veteran who advised Cho.
In January, President Moon Jae-in vowed to make large shareholders of big companies pay for their irregularities and illegalities, and ordered “aggressive” stewardship practice from the National Pension Service (NPS). As a result, in March, Cho failed to win an extension of his chairmanship from shareholders under the influence of their ringleader, the NPS.
Cho was reportedly startled by Park’s anger and feared for the fate of the flagship company that his father founded to build the transport business group. There were rumors that Hanjin had lost favor with the Blue House after it rejected a request for donation by Park’s friend Choi Soon-sil. The Blue House refused to get involved with the Hanjin crisis. The Financial Services Commission denied a bailout unless the owner family coughed up 1 trillion won ($877.8 million), not the 100 billion won Cho offered to chip in to help the struggling company stay afloat. As a result, Korea, which relies on exports and ships like few other countries, lost the country’s biggest — and world’s seventh largest — sea carrier.
Cho pleaded for the survival of Hanjin Shipping not for his group’s benefit but “for national competitiveness,” according to his acquaintances. Korea’s shipping sector has yet to recover its previous competitiveness. A company means life for a businessman. Cho was half dead when Hanjin Shipping went under, one of his acquaintances said.
Chairman and CEO of JPMorgan Chase, Jamie Dimon, recently said, “No country would be better off without its large, successful companies in addition to its midsized and small companies. Private enterprise is the true engine of growth in any country.” What about us? Conservative and liberal governments in Korea have regarded large companies as either their piggy banks or their scapegoats — when the need arises. One acquaintance of Cho’s pointedly said the state is partly responsible for the death of the tycoon. “Both the Park and Moon administrations should share the blame — half and half,” he said.
JoongAng Ilbo, April 11, Page 30