The family turmoil at the Hyundai Group could dampen foreign investor enthusiasm toward the Korean economy, Seoul-based foreign bankers warned yesterday.
Representatives of the Seoul-based foreign banks, meeting with Ministry of Finance and Economy officials, said the international community was disappointed by setbacks in Korea's corporate reforms and lack of managerial transparency at top chaebol, as vividly evidenced by the Hyundai incident.
"Foreign bankers raised fears that the ugly struggle for the chairmanship of the Hyundai Group will throw cold water on the ongoing efforts to overhaul corporate governance," said Kim Yong-duck, director-general of the ministry's International Finance Bureau at the meeting.
"They also warned that the Hyundai incident will negatively affect foreign investment flows into Korea, while credit standings of the Korean economy and the chaebol have suffered severe setbacks." Kim said that the foreign bankers also stressed the need for sustained reform efforts.
In the face of the intensifying calls for harsher chaebol reform meanwhile, the chaebol are coming under pressures to eliminate organizations created to facilitate the founding family's managerial interventions and inter-unit transactions.
Hyundai is reportedly considering scaling down the powers of the much-criticized Corporate Restructuring Committee and Hyundai Group CEOs Council. "Chairman Chung Mong-hun may announce plans to streamline certain organizations and set up investment screening councils at individual affiliates, during his press conference slated for early next week," said a group spokesman.
Samsung, LG and SK groups are also moving to relegate some of their group-controlling powers to individual subsidiaries. Despite the renewed reform pledges, however, the top conglomerates are expected to retain group control in certain form, analysts say.
Hyundai Group Chairman Chung visited the Federation of Korean Industries and expressed regret for causing concern among the local business community. He also expressed his wish to play a more active role in FKI activities, officials said, adding that the Hyundai chairman may replace his son, Chung Mong-koo, at the FKI chairmen's meeting.
Updated: 03/30/2000
by Yoo Cheong-mo Staff reporter
03/30/2000
