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Namyang chairman's resignation lifts stock price

Namyang Diary Product Chairman Hong Won-sik bows during an apology Tuesday for claims the company made last month, backed by false reports, that its yogurt drink Bulgaris had anti-viral properties making it effective against the coronavirus causing COVID-19. Yonhap
Namyang Diary Product Chairman Hong Won-sik bows during an apology Tuesday for claims the company made last month, backed by false reports, that its yogurt drink Bulgaris had anti-viral properties making it effective against the coronavirus causing COVID-19. Yonhap

By Kim Jae-heun

Namyang Dairy Product's shares soared 9.52 percent Tuesday following the much-awaited departure of Chairman Hong Won-sik from the top post.

Hong said he took full responsibility for claims made last month, backed by false reports, that the company's yogurt drink Bulgaris had anti-viral properties making it effective against the coronavirus causing COVID-19.

"First of all, I want to apologize to the public, our staff, retail distributors and farmers who are disappointed by the controversy surrounding the company related to Bulgaris, when all are facing hard times due to the COVID-19 pandemic," Hong told reporters during a press conference held at Namyang's headquarters in Seoul. "Our customers gave much love to the company, but we failed to satisfy their expectations by limiting ourselves to old ideas and only seeking business growth."

The former chairman added that he would not pass on management of the company to his children.

The press conference was held at 10:00 a.m. and lasted one hour. Namyang Diary's stock skyrocketed by 24.1 percent to reach 425,000 won during intra-day trading, however, this was later tempered and it finished at 362,500 won when the market closed at 3:30 p.m.

In addition, Hong acknowledged his fault for not taking proper action in the past when the dairy firm was embroiled in another scandal over an abusive salesman making threats to a retail distributor in 2013. He also apologized over his niece Hwang Ha-na's multiple indictments for drug use.

Prior to the chairman's resignation, CEO Lee Kwang-bum also sent an email to his staff informing them that he will step down from his position Monday.

The decision came two days after police raided the headquarters of the dairy firm, April 30, as part of their investigation of Namyang making false reports about Bulgaris's "anti-coronavirus" properties.

Earlier, Sejong City Government sent a prior notification to Namyang that it would order a two-month suspension of operations at the company's facility there, which makes over 40 percent of its yogurt drink products.

Hong's eldest son Hong Jin-seok, a former executive director at Namyang Dairy Product and once seen as his heir apparent for the top position, was also previously embroiled in a scandal over allegations that he embezzled company money.

The younger Hong is alleged to have used company money to rent a luxury car for personal use that also transported his children to and from school. He was dismissed as an executive director as a result.

"Please trust our employees and support them. They will lead Namyang through changes and innovation," Hong said.

The former chairman is the eldest son of Namyang Dairy Product founder Hong Du-yeoung. He joined the company as a member of its board of directors in 1977 and became president in 1990.

Hong was made chairman in 2003 and introduced various hit items including "Delicious Milk GT" and "French Cafe Coffee Mix." However, the company has been struck hard by numerous scandals that have damaged its reputation as a major dairy firm.


Kim Jae-heun jhkim@koreatimes.co.kr


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