Chaebol reform at forefront of South Korea presidential campaign - again

Mon Mar 27, 2017 11:38pm EDT
 
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By Hyunjoo Jin, Se Young Lee and Nichola Saminather

SEOUL (Reuters) - South Korea’s family-run conglomerates are facing calls for a shakeup in their governance from a leading candidate in May's presidential election, following the ouster of former President Park Geun-hye in a burgeoning influence-peddling scandal.

The conglomerates known as chaebol have come under the reform buzz saw before, only to emerge bigger and stronger than ever. The country’s four biggest chaebol groups account for around half the stock market's value, according to the Korea Stock Exchange.

The question after the May 9 election is how deep will the reform drive go this time? And would a new president tackle what critics say is at the heart of chaebol corporate governance conundrum - the spiderweb of cross-shareholdings among group companies held by their founding families?

"...I do think there has been a sea change in attitudes among the Korean population at large so there is an increased chance of chaebol reform succeeding," said Mark Mobius, the executive chairman of Templeton Emerging Markets Group.  

"But we can’t expect fast results simply because the importance of the chaebols in the economy is still so great," he added in an email interview.

PARDONING CORPORATE CHIEFS

The ouster of Park Geun-hye as president on March 10, following months of mass demonstrations, once again exposed the cozy ties between politicians and big business. Park herself had come into office promising to reform the conglomerates.   Continued...

 
FILE PHOTO: The headquarters of Hyundai Motor and Kia Motors are seen in Seoul, November 16, 2011. REUTERS/Jo Yong-Hak/File Photo