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November 05, 2009
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| The apparent suicide of Park Yong-oh shines the spotlight on the dark side of corporate governance that’s placed firmly in the hands of the founding family, which can lead to serious internal rifts, observers said. “The biggest problem is that the founding family members, who actually own only a small amount of shares of the conglomerate, decide who gets the top management position” said Kim Jin-bang, an economics professor at Inha University. “The founding family wants to pass on the company to the next generation, like monarchs, and try to act both as the largest shareholder and the chief executive at the same time.” Park - a former chairman of Doosan - and his two sons became outcasts in their family in 2005. At that time, Park railed against the family’s decision to name his younger brother Park Yong-sung as the next chairman of Doosan. Park eventually unloaded his entire stake in Doosan, including the shares that his sons own. He also cut all his ties with the conglomerate. This isn’t a story that is unique to Doosan, however. Other powerful families in the business world have been torn apart by feuds over management issues and succession. The most infamous incident involved a feud between Chung Mong-koo and his younger brother Chung Mong-hun over control of Hyundai Group in 1998. The dispute started after the younger Chung was named a joint chairman of Hyundai Group with his older brother. After the succession torch was passed on to the younger Chung, the older brother left the Hyundai Group to establish his own empire with Hyundai Motor. The most recent high-profile instance of sibling rivalry at a Korean conglomerate involves Kumho Asiana Group. In this dispute, Park Chan-koo was forced to give up control of Kumho Petrochemical after his older brother Park Sam-koo decided to name an outside manager as chairman of Kumho Asiana Group. Although the public was well-aware of the divide between the family that runs Doosan, news of Park’s death came as a surprise in the business community. “It’s a tragedy for a man who worked so hard,” said a Hyundai Group official, requesting anonymity. Shares of Sungjee Construction, where Park was chairman, fell 9 percent yesterday to close at 4,350 won ($3.69). Sungjee Construction shares started the day in positive territory but fell as low as 13 percent after news broke of Park’s death. But his death didn’t impact Doosan shares, which actually inched up slightly from the previous day to close at 81,900 won. Doosan Infracore gained 3.51 percent and Doosan Heavy Industries edged up 0.62 percent to end the day at 17,700 won and 65,300 won, respectively. “Doosan shares were up because Doosan Infracore’s third quarter performance was better than initial expectations,” said Sung Ki-jong, an analyst at Daewoo Securities. “Park’s death has little effect since he is no longer considered part of Doosan Group.” By Lee Ho-jeong [ojlee82@joongang.co.kr] |
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