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By Lee Hyo-sik
The Federation of Korean Industries (FKI), which represents the interests of the country's family-controlled conglomerates, is heading toward dissolution as Samsung and other major member companies have pledged to exit the scandal-ridden body.
The business lobby group has been accused of having forced members to donate millions of dollars totwo dubious foundations controled by President Park Geun-hye's confidant Choi Soon-sil.
On Tuesday, Samsung Electronics Vice Chairman Lee Jae-yong and other heads of large business groups promised lawmakers that they will abandon their FKI memberships, dealing a serious blow to the 55-year-old organization set up after a military coup by former President Park Chung Hee.
Besides Lee, SK Group Chairman Chey Tae-won and LG Group Chairman Koo Bon-moo said during the National Assembly's inquiry into the Choi scandal that they will not pay FKI membership fees and will take other steps to distance themselves from it.
The Korea Electric Power Corp. (KEPCO) and dozens of other public enterprises have already withdrawn their memberships from the lobby group.
"The FKI will be dismantled at the end of the day," said an executive at one of the FKI member firms who declined to be named. "If Samsung, SK, and LG exit the lobby group, others will certainly follow. The country's top four business groups account for 60 percent of FKI's annual membership fees. It cannot function without its major stakeholders."
Established in 1961, the lobby group has about 600 member companies, including Samsung and Hyundai Motor, and collects about 40 billion won ($36 million) in membership fees annually.
The executive said the majority of FKI members are disappointed at how the lobby group has been operating, adding that it has to take drastic steps to redefine its role and function.
"FKI has become a liability for its member firms so there is no reason for its existence," he said. "Some say it should become a conservative think tank like the Heritage Foundation in the United States, absorbing its affiliate, Korea Economic Research Institute. But this cannot be the ultimate solution."
FKI must first be disbanded, the executive stressed, adding that a new entity would be formed if Samsung and other conglomerates need to represent their interests in a concerted manner.
In response to the growing calls for its dismantlement, FKI said it has not yet made a decision concerning its fate.
"We first need to gather opinions from our members and will then decide what to do," an FKI official said. "In the meantime, we will take all possible measures to regain public trust."
The FKI has often been at the center of many scandals over the years as it raised funds from large businesses for those in power in exchange for the government's chaebol-friendly economic policies.
In addition to the Choi scandal, it came under fire early this year for giving money to the right-wing Korea Parent Federation in return for allegedly organizing pro-government rallies.
