FKI seeks 'one more chance' under revamped plan

Industry

Published: 22 Aug. 2023, 16:07

FKI seeks 'one more chance' under revamped plan

The Federation of Korean Industries' new chairman Ryu Jin speaks to the press on Tuesday in Yeouido, western Seoul. [FEDERATION OF KOREAN INDUSTRIES]

The Federation of Korean Industries (FKI) starts afresh on Tuesday with a new name and leader.

Its new beginning was endorsed by Korea's top four conglomerates Samsung, SK, Hyundai Motor and LG all rejoining.

The FKI appointed Poongsan Group Chairman Ryu Jin as its new head at the general meeting on Tuesday and pledged to transform itself into a global think tank, distancing itself from the lobbying role which it was largely criticized for in the past. As part of this effort, the FKI decided to merge with the group's affiliated think tank, Korea Economic Research Institute (KERI).

Its Korean name has changed back to its founding name from 1961 which translates to the association of Korean businessmen, although its English name will remain the same.

Its newly set up five-member Ethics Committee will monitor any inappropriate links with political circles. The committee members were not disclosed Tuesday. The FKI also established what is called the Charter of Ethics to ensure the organization's activities are ethical and transparent.

"We will continue to serve as a driving force behind the Korean economy as we move forward," said Ryu during his inauguration speech made Tuesday at the general meeting, held at FKI headquarters in western Seoul.

"We will remedy our missteps and eliminate erroneous practices. We will follow ethical management principles as strictly demanded by the public. We will set standards to help a transparent business culture to firmly take root."

Ryu also emphasized that his networks in the United States and Japan will create new channels of communication and opportunities for the FKI member companies.

The FKI was previously one of the largest business organizations in Korea which represented the voices of some 400 companies including chaebol such as Samsung and LG.

Its reputation was severely tarnished in 2016 when it was mired in a massive influence-peddling scandal involving former president Park Geun-hye. It was slammed for acting as a go-between for the Blue House and Korean conglomerates, pressuring them to make donations to culture and sports foundations which were later found out to be misappropriated and embezzled.

With the exit of Korea’s major business groups — Samsung, SK, Hyundai Motor and LG — from the organization, the FKI has stayed largely defunct ever since.

"I persuaded the four conglomerates by seeking one more chance because anybody can make a mistake once," Ryu said. "I don't have any words to say about the past but I plan to make a system that can prevent similar events in the future."

Ryu said the revamped FKI will target having Korea join the Group of Seven and act as a global think tank similar to the U.S.-based Center for Strategic and International Studies (CSIS).

"I plan to outsource research materials from other think tanks and research groups in order to publish top-notch reports that no business groups in Korea can pull off," said Ryu. "Like CSIS, we hope to provide neutral information that covers various topics."

When asked about membership fees and fund creations, which acted as a means to collect improper money from conglomerates in the past, Ryu said those aspects would be closely screened by the newly established Ethics Committee.

"If the committee doesn't provide approval, [the funds] won't be collected. Although big companies will relatively contribute more, the membership fee system will have to be revamped away from collecting too much from the conglomerates," Ryu said. "The organization will not be centered on chaebol but will also focus on all member companies."

In that sense, Ryu said Poongsan Group, which ranks below 70th place on Korea's list of large companies, is suitable to represent Korea's businesses as it can relate to both small and large companies.

Samsung, SK, Hyundai Motor and LG, which are members of KERI, agreed to have their memberships extended to FKI in the aftermath of the FKI-KERI merger. Samsung Securities, however, did not agree to the membership extension, taking a cautious approach as it is not subjected to the monitoring of the Samsung Compliance Committee, hence more vulnerable to any possible unethical activities from the FKI.

The Samsung Compliance Committee is an independent committee that oversees the compliance of Samsung Electronics, Samsung C&T, Samsung SDI, Samsung Electro-Mechanics, Samsung SDS, Samsung Life Insurance and Samsung Fire & Marine Insurance.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]