S.Korea reprimands conglomerate executives

[Ulhas Joglekar]

25 December 1999
S.Korea reprimands conglomerate executives
SEOUL, South Korea: A government watchdog reprimanded senior financial
executives of South Korea's leading conglomerates Hyundai and Samsung on
Friday for alleged illegal trade practices.
Eighteen executives at Hyundai Investment Trust Management Co. were accused
of using costumer deposits to buy bonds from another Hyundai subsidiary,
Hyundai Securities, at higher-than-market prices last year.
The transactions gave Hyundai Securities $185 million in profits, said
Seoul's Financial Supervisory Service. As a reprimand, the agency banned a
total of 47 Hyundai employers from company management for three months.
Forty-two Samsung employees were similarly reprimanded Friday as the
financial watchdog announced the results of a special audit of conglomerate
units.
Samsung Life Insurance Co. has provided $382 million in loans to the
conglomerate's ailing car-making unit, Samsung Motors Inc., without any
collateral, it said.
Samsung Life incurred a huge loss when the motor company was declared
near-bankrupt and put under court receivership earlier this year.
President Kim Dae-jung was urging the nation's conglomerates to make their
finances transparent to rebuild investors' confidence in the Korean economy.
During earlier audits, the conglomerates were slapped with millions of
dollars in fines. Though long illegal, the practice of cross-funding
subsidiaries by conglomerates was condoned by the country's former military
rulers.
The conglomerates used cross-funding and cross-loan payment guarantees to
fuel their rapid expansion. A typical Korean conglomerate, or chaebol, is
controlled by a single family and has 40 to 50 subsidiaries, making
everything from computer chips to cars and ships.
The collapse of some of the weaker conglomerates fueled South Korea's
financial turmoil in 1997, which forced the country to accept a record $58
billion bailout by the International Monetary Fund. (Associated Press)
For reprint rights: Times Syndication Service
|Disclaimer|
For comments and feedback send Email
Bennett, Coleman & Co. Ltd. 1999.