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2017-11-03 17:32
Reforming the nation’s family-controlled conglomerates was one of President Moon Jae-in’s key campaign pledges, as had been the case with most of his predecessors.

All former presidents failed to keep their promises, to varying degrees. Moon’s critics say the incumbent leader will likely prove to be little different.

Against this backdrop, Kim Sang-jo, President Moon’s antitrust czar, met with leaders of the top five chaebol Thursday. Kim called for the executives to speed up “voluntary” reforms by, for instance, enhancing cooperation with small and midsize suppliers and improving opaque governance structures.

The meeting between the chairman of the Fair Trade Commission and the top officials of the conglomerates was appropriate and timely. By most signs, these business groups were dragging their feet, saying “genuine reforms take time.”

According to a commission report released earlier in the day, for example, the 22 largest conglomerates incorporated only 73.3 percent of their subsidiaries into holding companies as they had promised. This means 223 out of their total 835 affiliated businesses remain under the control of the owner families while staying off the radar of the government’s trustbusters. 

It is also a proper move in this regard that Kim’s agency will look into these groups’  charity foundations _ originally aimed at promoting public interest as part of chaebol outreach programs but also regarded as a tool for owners to maintain control over the entire group through dubious cross-shareholding schemes.

Chaebol significantly contributed to Korea’s economic growth once but have long become burdens hindering Korea’s efforts to make another leap.

Their sheer size and greedy practices stifle smaller enterprises’ innovation, and the handover of operational control to heirs whose abilities have yet to be verified pose obstacles to further growth, as seen by the phrase “CEO risks.” 

Many chaebol executives say, “Let’s lie flat on the ground for four more years and do as little as possible,” until Moon’s term of office is over.

If pushing them from behind makes little progress, the government should pull them forward.

 

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