By Yoo Seungki
SEOUL, Dec. 30 (Xinhua) -- The biggest South Korean business lobby, composed of conglomerates called chaebol here, is facing a risk of the break-up, or at least a full-scale reform, over its deep-rooted link with the presidential power that was revealed again through a scandal involving President Park Geun-hye.
Samsung Electronics Vice Chairman Lee Jae-yong appeared at a parliamentary hearing on Dec. 6, the first to grill all involved in the scandal that led to the impeachment of President Park, together with the chiefs of other large corporations that are members of the Federation of Korean Industries (FKI).
The FKI is ostensibly a business community to speak for over 600 big companies, but it is now being suspected of acting as a channel to let Choi Soon-sil, Park's longtime confidante, pressure conglomerates into donating tens of millions of U.S. dollars to two nonprofit foundations controlled by Choi.
Stunning TV viewers of the hearing broadcast live, Lee said the country's No.1 family-run conglomerate will break away from the FKI and stop paying membership dues without elaborating on a specific date.
"Grandfather-initiated FKI is facing a fate of being broken up by the hands of his grandson. An old saying comes true that one who ties a knot eventually unties it," Park Ju-Geun, president of CEO Score, a business data provider, said in a Thursday interview with Xinhua.
Lee Byung-chull, the founder of Samsung Group, was the first chairman of the FKI that was set up in 1961, just a year after former military strongman Park Chung-hee, father of the impeached President Park, gained power in a coup.
It is a "historical irony," the CEO Score chief said, as the Samsung founder-launched lobby under the presidency of elder Park is on the verge of dissolution at the hands of the Samsung heir under the presidency of younger Park.
Samsung has yet to declare its abandonment of FKI membership, but LG Group, the country's No.4 conglomerate, left the lobby earlier this week. Following suit would be SK Group and CJ Group given that their heads indicated departure from it during the National Assembly hearing. SK is the third-largest business group.
COZY TIES FROM ORIGIN LIMITATIONS
The FKI's fate at risk disclosed cozy ties between the presidential power and the chaebol families again, which can be seen as commonplace in South Korea where a handful of big corporations headed the industrialization from a war-torn country to the Asia's rising economy by the help of military dictatorships.
In the early days of industrialization, the FKI was an easy channel to relay state-led development plans to a small number of businesses, which in turn made almost monopolistic profits with government funds, the only source of foreign currency capital at the time.
The country's presidents and chaebol families "needed each other," said the CEO Score chief who claimed that the FKI had limitations from its origin as it was born under such circumstances as collusive links with state power.
The distorted connection has lasted until now, though it temporarily weakened for around a decade under liberal presidents Kim Dae-jung and Roh Moo-hyun, now that every new government can push a respective "trademark" economic policy more easily through the sole channel of the FKI.
Future governments may be enticed into maintaining the links, but companies are now willing to leave the lobby and sever the connections as capital power has overtaken political power since 2000 or so, according to the CEO Score head.
The biggest turning point was the 1997 foreign exchange crisis that led South Korea to open its financial market to foreign capital. In the past 20 years, major conglomerates went global except a few consumer goods-centered businesses, reducing dependence on the domestic market and in consequence, on the domestic political power.
"Samsung Group is generating about 80 percent of revenue globally. Top 10 business groups are doing so," said Park Ju-Geun who explained fewer motives for chaebols to cozy up to political power due to the altered business environment.
DISBAND OR SURVIVE
Calls are rising for the disbandment of the FKI, and even the break-up of all conglomerates. Under the impeached Park's presidency, people seem to have been increasingly convinced of their uselessness and perniciousness.
The FKI was at the center of controversy over the elderly men's protest against the bereaved families of the Sewol ferry-sinking victims. Local media reports said the business lobby paid the elderly protesters on the instruction of the presidential Blue House.
It also helped establish Mir and K-Sports foundations, controlled by Park's confidante, by collecting funds from its member conglomerates. In this case, the FKI also served as a nexus between state power and chaebol.
"It is right to dismantle the FKI," said the CEO Score chief who referred to the Korea Chamber of Commerce and Industry (KCCI) as an alternative to the chaebol lobby group. The KCCI has about 160,000 member companies and includes the FKI members.
Independent counsel is investigating into whether businessmen had bribed the president and her friend in return for getting business favors or support in the management control transfer in generations.
Powerful presidential contenders in the opposition bloc pledged to break up conglomerates, which have pursued the private gains of chaebol families rather than a higher enterprise value for shareholders.
"Large businesses have put top priority soly on the private gains of chaebol families, which naturally lead to links with the presidential power," said the CEO Score head.
He said the FKI will have no bright future unless it breaks its subservience to the "symbiotic relationship," stressing the need to keep in check the unchecked presidential and chaebol powers.
