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Honorary chairman of Hyundai retires from management |
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June 1, 2000
SEOUL, MAY 31 (AP) - South Korea's largest business group Hyundai announced the retirement of its founder Chung Ju-yung as honorary chairman Wednesday, giving in to mounting pressure from the government and creditor banks.
Hyundai Group also said Chung's two powerful sons - Mong-ku, who heads the carmaking units, and Mong-hun, who controls electronics and several other units - will relinquish their managerial posts.
Hyundai Group said the decision was made by the senior Chung, but Hyundai Motor declined to confirm whether Mong-ku accepted the decision.
"As of now, there has been no official indication of whether Chung Mong-ku will step down or not," said Stephen Kitson, a spokesman for Hyundai Motor.
Yonhap News agency and other local media earlier reported that Mong-ku rejected the decision while Mong-hun neither confirmed nor denied his resignation.
If the changes really happen, it would be one of the most significant development for restructuring at South Korea's conglomerates, or chaebol, which have been controlled for decades by a handful of families and their followers.
"If it really happens, it would mark a turning point in South Korea's business history," said Kim Seok-joong, chief researcher at Daewoo Securities Co., said of Hyundai's management change.
"The failure to separate management and ownership at major businesses was the main reason behind corrupt relations between politics and businesses. I can imagine that other conglomerates would be closely watching the development."
The government welcomed the announcement. Lee Yong-keun, chairman of the Financial Supervisory Commission, the government's watchdog for corporate restructuring, said he believed the Chung family's decision to reduce its role will improve market confidence in Hyundai.
The stock market responded positively to the news, with share prices jumping 5.87 percent to close at 731.88 points Wednesday. The market had slumped in the past week because of concern over Hyundai's cash flow problems.
President Kim Dae-jung has made reforms at South Korea's bloated conglomerates the centerpiece of his economic policy goals. It was also a key condition for a dlrs 58 billion bailout by the International Monetary Fund in late 1997.
The announcement came after its construction arm, Hyundai Construction and Engineering Co., was forced to receive 200 billion won (dlrs 167 million) in emergency relief funds from government-controlled banks last week.
Hyundai claimed the cash crunch was temporary and announced a plan to improve its liquidity position, but government and creditor pressure built on Hyundai to fully reform and restructure its management system in exchange for the relief.
On Wednesday, Hyundai said it would sell stocks and real estate worth 5.9 trillion won (dlrs 4.9 billion) in short or medium-term funds, sell Hyundai Elevator Co. wholly or partially and focus on core businesses, including automaking, shipbuilding and electronics.
The retirement of the Chung Ju-yung came as a surprise. He has been a towering figure in Hyundai and regarded as a symbol of South Korea's family-controlled conglomerates.
An immigrant from what is now North Korea, Chung, 84, started business by opening a rice sales shop in Seoul in the late 1940s and has since built Hyundai into South Korea's largest conglomerate with 52 subsidiaries making cars, ships and semiconductor.
"I strongly believe that independent management by professional managers in each company is the only way to be successful in the globally competitive market, even if there were some advantages of a group system management," Chung said in a retirement statement read by Kim Jae-soo, head of the group's restructuring committee.
The senior Chung said that Mong-hun will remain involved in Hyundai's business with North Korea, including a dlrs 942 million tourism project at a scenic mountain. |