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| Coupang founder and Chairman Kim Bom-suk poses after Korea's e-commerce giant was listed on New York Stock Exchange in March. Korea Times file |
By Yi Whan-woo
The Fair Trade Commission (FTC) announced Thursday it added Coupang to its new chaebol "watch list" but that Kim Bom-suk, the founder and chairman of the Korean e-commence giant, was not named as the company chief due to his nationality.
This means that Coupang faces stricter filing regulations, such as disclosing detailed information on management and business activities, but Korean American Kim and his family will avoid those regulations as well as accountability for any violations or scrutiny of his personal financial deals.
Coupang is one of 71 large business groups with assets exceeding 5 trillion won ($4.5 billion) on the FTC's updated watch list. Along with Coupang, seven others were added to the list, including Korea Aerospace Industries (KAI), the country's sole aircraft manufacturer.
Coupang's assets amounted to 5.8 trillion won in 2020, which qualified it for the list aimed at checking antitrust moves and enhancing corporate transparency.
The exclusion of Kim makes Coupang an "ownerless" corporation with regard to the antitrust regulations, although he is entitled to exercise 76.2 percent of the voting rights in the company.
The FTC's decision came after weeks of debate over whether or not it should exclude Kim from the list as it has customarily done for foreign business leaders.
"Coupang, of course, was set up under Korean law and there is no doubt Kim virtually controls the firm," FTC Vice Chairman Kim Jae-shin said during a press briefing at the Government Complex Sejong.
The vice chairman referred to Coupang's 2010 establishment in Seoul and Kim's voting rights in proportion to the percentage of shares he holds after the firm made its debut on the New York Stock Exchange, March 11.
"Regardless, we have finalized the decision by taking into account past cases, the lack of current provisions and other factors," he said.
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| Coupang delivery truck / Korea Times file |
The commission excluded Kim initially from its provisional list in early April.
But it faced a strong backlash from civic activists and politicians who claimed it discriminates against Korean entrepreneurs whose companies are worth 5 trillion won or more and accordingly are on the FTC's watch list.
In 2017, the antitrust regulator added Korea's biggest portal website Naver and its founder Lee Hae-jin to the list.
Lee, at that time, had a stake of about 4 percent in the company, which is comparatively smaller than Kim's 10.2 percent stake in Coupang.
Moreover, Lee was not involved in any form of cross-shareholding, a practice abused in the past by chaebol as a way to control their corporate empires despite holding a tiny stake.
The controversy did not stop there after the FTC reportedly changed its mind and considered putting Kim on the list, which triggered a strong protest from advocates of foreign investment and the Korea-U.S. Free Trade Agreement (KORUS FTA).
The advocates argued it could intimidate foreign investors, noting the listed individuals are subject to strict regulations on financial and business transactions.
They also brought up a possible breach of the KORUS FTA that stipulates U.S. entrepreneurs should not receive mistreatment.
So far, no foreign owner of a company has been added to the corporate watch list.
The most cited case is S-Oil, a major Korean refiner that remains "ownerless" on the watch list due to its largest shareholder being Saudi Arabia's Aramco.
Regarding issues over fairness between Korean nationals and Kim, the FTC vice chairman said, "It is tough to apply current provisions to a foreigner."
He added, "It would be easier to understand if you think of Jeff Bezos of Amazon and Mark Zuckerberg of Facebook being on the watch list just because their respective Korea branches have assets worth more than 5 trillion won."
Introduced in 1987, the watch list is seen as outdated as it is mainly aimed at keeping tabs on family-owned conglomerates, while the wealthiest entrepreneurs these days are mostly self-made.
Meanwhile, Hyundai Motor Group and Hyosung Group, both family-owned conglomerates, had official changes in their respective ownership from father to son ― from Chung Mong-koo to Chung Euisun for Hyundai Motor Group and from Cho Seok-rae to Cho Hyun-joon for Hyosung Group.
