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The sad tale of Hyundai scion's
demise
By Gary LaMoshi
HONG
KONG - It's an overstatement to say that South Korean
corporate reform was found dead in a flowerbed outside
Hyundai Asan headquarters in Seoul at dawn Monday
morning. But the apparent suicide of Hyundai heir Chung
Mong-hun confirms the unholy alliance between politics
and big business is, ironically, alive and well.
Chung jumped, according to investigators, after
being grilled in three separate 12-hour shifts about his
role in the US$500 million North-South bribery scandal.
Ahead of the historic summit between North and South
Korean presidents Kim Jong-il and Kim Dae-jung, Hyundai
Asan allegedly served as the conduit for payments to the
North along with a 15 billion won ($12.7 million) tip
for D J Kim's chief of staff, Park Jie-won. Cynics might
suggest this sordid tale reveals the price of a Nobel
Prize.
But it's far more revealing about South
Korea and the unique place its business elite occupies.
Reform has gone a long way to breaking the power of the
family-controlled business groups, but - and here's the
part that requires real judgment - when there's
something truly historic, or perhaps when there's
something historically sleazy, afoot, you'll still find
the chaebol right in the middle of it.
Malawi, Jamaica, Korea
Ninety years
ago, the Korean Peninsula was brutally colonized by
Japan. Fifty years ago, it was the first hot
battleground of the Cold War. Forty years ago, South
Korea was among the first recipients of US Peace Corps
volunteers, with a per capita gross domestic product
(GDP) on par with Jamaica and Malawi. Six years ago,
South Korea was admitted to the Organization of Economic
Cooperation and Development, the club for rich,
industrialized nations.
South Korea's
unprecedented economic success story was the result of
an alliance between the government and the
chaebol (business conglomerates). In the early
1960s, military ruler Park Chung-hee laid out the
economic blueprint. The chaebol's job was to
provide export driven growth. That meant bigger was
better, even if it wasn't necessarily profitable. The
government would provide ensure cheap credit, export
opportunities, and disorganized labor (ie, a ban on all
independent unions). It would also look the other way at
any corporate wrongdoing on the home front.
As a
result, Samsung, LG, Hyundai, SK and Daewoo came to
control 70 percent of South Korea's industrial output.
Those top five chaebol grew into some of the
world's largest companies, and South Korea's story was
the economic equivalent of the little engine that could.
Park's pick
Hyundai gained favor first
with the US military - founder Chung Ju-yung's brother
Chung In-yung was a rare fluent English speaker in 1950s
Korea who helped win wartime and postwar contracts - and
became a major construction company. President Park
picked Hyundai as one of his favored businesses to
spearhead growth and launched the company toward
international expansion.
From its construction
roots, Hyundai branched into electronics, financial
services, automobiles, shipbuilding and more. Car
exports made Hyundai the best known of the
chaebol internationally next to Samsung, its
principal contender for the top spot at home. But Chung
Ju-yung never forgot his humble beginnings in what
became North Korea.
The Hyundai founder got his
start when he stole the family cow and ran away from
home. The teenager sold the cow for his seed money in
the south. To close the circle, on two occasions Chung
personally led cattle drives across the 39th parallel to
provide famine relief and make nice with the North
Korean regime.
Like other chaebol,
Hyundai looked wistfully northward to escape the
drudgery (and bankruptcy) of post-crisis South Korea,
which boasts the most vigorous and successful corporate
reform in Asia. North Korea was virgin, needy territory
where they could relive the glory days of breakneck
growth with a friendly government and a compliant labor
force.
While others dreamed, Hyundai invested in
North Korea, setting up tours to Mount Geumgang in the
North and industrial projects. As rival chaebol
knew, though, these efforts at economic cooperation were
money-losers that once-mighty Hyundai couldn't afford.
Brotherly hate
Despite being ordained
by his father as his heir, Chung Mong-hun was a loser in
the family scramble after the patriarch's death in 2000.
Kim Dae-jung's drive to break up the chaebol
helped eldest brother Mong-koo split off profitable
Hyundai Motor while sibling Mong-jun took away Hyundai
Heavy Industries. Mong-hun was left with the sinking
flagship construction business, the chip maker that
became Hynix Semiconductor and other losers.
What's stunning in the whole sad story is that
Kim's government would turn to one of the same corporate
giants it vilified when it had dirty work to do with
Pyongyang. Just as stunning, Hyundai and Chung said yes.
Like this season's other famous suicide, UK weapons
inspector David Kelly, Chung's work for his government
had put him in water over his head; perhaps Chung
Ju-yung would have found his footing, but Mong-hun
couldn't.
That Kim's government couldn't do
business in North Korea without the chaebol
indicates how deeply these business groups remain woven
into the national fabric. President Roh Moo-hyun may
well owe his narrow election victory to Chung Mong-jun's
decision to drop out of the presidential race and throw
his support to Roh. In South Korea, governments come and
go, but there is no end to family business.
(Copyright 2003 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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