Why does he represent a company?A member of the Democratic Party (DP) has interfered in an M&A deal of a private airliner and is accused of pressuring the union to draw results favorable for its founder who has been elected to represent the ruling party. The DP tried to distance itself from the affair. The controversial member Kim Hyeon-jeong, a deputy spokesman for the party, said he meant to mediate “on goodwill.” The company involved — Eastar Jet — was founded by Rep. Lee Sang-jik, a DP lawmaker, who served on a presidential commission on jobs after President Moon Jae-in was elected. The lawmaker also headed the state-run Korea SME and Startup Agency.
Kim met with the union members of Eastar as a protest against the unpaid salaries of 25 billion won ($21 million) and advised them to issue a press statement bringing attention to how Jeju had been stalling acquisitions of the smaller budget carrier to shoulder half of the overdue payment. The union refused to take the advice. If it had, the stalled M&A deal, due to overall difficulties in the airline industry and foggy prospects amid the Covid-19 pandemic, could have been in greater danger of falling through.
If the deal had proceeded as advised by the DP member, Lee and his family would have made a great profit from the stake sale. Left-wing Justice Party criticized Kim, the spokesman, who used to represent a labor union, for speaking on behalf of the founder instead of the workers. Why did a party member have to get involved in a corporate M&A deal in the first place?
The Lee family is facing other controversies too. Amid the focus on overdue wages, Lee announced that his two children, both in their 20s, would give up their combined stake of 39.6 percent in Eastar Jet through Eastar Holdings. The matter was not discussed with Jeju Air in advance, which suggests that the announcement was more of a publicity stunt.
The two children own the entirety of Eastar Holdings and will command the controlling stake in the airliner through a paper company Lee created in 2015. One was still a teen then. Eastar Holdings somehow accrued 10 billion won in just two months without any clear business activities and made the two siblings the biggest shareholders of the airliner. Both Lee and the DP must answer the controversies. If they try to wiggle their way out, the party as well as the Blue House could come under fire.