| The entrance to a National Pension Service branch office in southern Seoul / Korea Times file |
By Yi Whan-woo
The National Pension Service (NPS) faces backlash from businesses here over its plan to file a suit against companies in which it holds a considerable stake, if they are found to be negligent resulting in shareholders' losses.
The plan was initiated in late 2021 by the Ministry of Health and Welfare, which oversees the NPS, in a bid to prevent illicit business activities by having the NPS exercise its shareholder rights.
The NPS said no companies are on its target list and no details concerning the plan have been specified.
But in a joint statement announced by the seven business lobby groups, the involved companies argue it may even target legitimate business activities.
The seven are the Korea Enterprises Federation (KEF), the Korea Listed Companies Association, the Korea Chamber of Commerce and Industry, the Korea International Trade Association, the Federation of the Middle Market Enterprise of Korea, the Korea Federation of SMEs (KBIZ) and the KOSDAQ Listed Companies Association.
“Their possible suit will be exploited by the NPS as a means to 'tame' companies and eventually inflict losses on regular people,” a KEF official said, Tuesday, on condition of anonymity.
Citing the statement issued on Monday, the official said the NPS plan should be “revised from scratch.”
A KBIZ official pointed out the NPS makes investments using taxpayers' money collected as monthly premiums for retirement pensions. He went on to say, “such savings for the retired should not be misused as a mean for the NPS to wield excessive power.”
The NPS first came up with a guideline to take legal action against companies as a representative of shareholders in 2019 but has yet to follow through.
The NPS currently has shares of 5 percent or more in about 300 companies.
Some industry sources view the possible NPS move may affect Korea's sovereign credit rating by increasing investment risks.
“The plan is different from legally exercising one's shareholder rights. It is considered a threat to the fate of companies,” a source said.
A different source viewed that, even if a company manages to win in a possible suit, its reputation can be tarnished that it may have trouble attracting investments.
“This case can be more likely, considering fairness and integrity in management are being stressed more than ever in accordance with environmental, social and corporate governance (ESG) principles,” the source said.