Summons of Major Company Heads Ahead of October 10 National Audit
Issues Including Rejoining Hankyung Association and Rural Coexistence Fund
18th: 77, 19th: 125, 20th: 159, Last Year: 200, What About This Year?
Concerns Over Transformation into a 'Corporate Discipline Enforcer'
The National Assembly has announced a 'mass summons' of corporate heads again for this year's audit of state administration. The names of the heads of the four major conglomerates?Lee Jae-yong of Samsung Electronics, Chey Tae-won of SK Group, Chung Eui-sun of Hyundai Motor, and Koo Kwang-mo of LG?have been mentioned, creating a tense atmosphere in the business community. The problem lies in the fact that the summons and witness selections of business leaders are largely formalities and mere showpieces. Concerns are rising that the original purpose of the audit, which is to oversee the overall operation of the government, has disappeared and it has instead deteriorated into a 'venue for disciplining corporations.'
Ahead of the National Assembly's audit scheduled for the 10th, the Industry, Trade, Small and Medium Enterprises and Venture Businesses Committee (SanJawi) and the Agriculture, Forestry, Livestock, Food, and Maritime Affairs Committee (Nonghaesuwi) are considering summoning the heads of the four major conglomerates.
From the left, Lee Jae-yong, Chairman of Samsung Electronics; Chung Eui-sun, Chairman of Hyundai Motor Company; Koo Kwang-mo, Chairman of LG; and Chey Tae-won, Chairman of SK. [Photo by Asia Economy DB]
SanJawi intends to summon the heads to question the circumstances surrounding their withdrawal from the Federation of Korean Industries (FKI) following the state affairs manipulation scandal during the Park Geun-hye administration, their re-entry into its successor, the Korea Economic Association (Hankyunghyeop), as well as issues related to collusion between politics and business and measures to prevent preferential treatment of conglomerates. Although the heads of the four major groups were excluded from the first witness list announced on the 25th of last month, additional witness selections can be made during the audit period through negotiations between the ruling and opposition parties, so the situation remains uncertain.
In Nonghaesuwi, opposition party lawmakers have raised concerns about the poor contribution performance to the 'Rural and Fishing Village Win-Win Cooperation Fund' and have applied to summon multiple group chairpersons as witnesses, including Choi Jung-woo of POSCO Holdings and Cho Won-tae of Hanjin Group, alongside the heads of the four major conglomerates.
The Rural and Fishing Village Win-Win Cooperation Fund was established in 2015 when farmers strongly opposed the ratification of the Korea-China Free Trade Agreement (FTA) in the National Assembly. It was a fund prepared by the ruling party, opposition, and government. Launched in March 2017, the goal was to raise 1 trillion won by collecting 100 billion won annually. The opposition plans to pressure companies considering that the amount collected so far is about 210 billion won, which is far below the target. Currently, the fund is only included in the witness application list of opposition lawmakers, and since there are difficulties in reaching an agreement between the ruling and opposition party secretaries, there is also a possibility that the summons may be withdrawn.
Democratic Party lawmaker Kim Seong-hwan has applied to summon Lee Jae-yong and Chey Tae-won as witnesses regarding the Yongin semiconductor cluster. It is expected that they will be questioned about the current progress and carbon neutrality measures. Another lawmaker from the same party, Kim Yong-min, has applied to summon Choi Jung-woo as a witness.
The business community holds the view that the appearance of conglomerate heads as witnesses is problematic in many respects. Above all, as they currently serve as 'private diplomats' traveling frequently at home and abroad to attract expos, it could disrupt their schedules and image. In fact, Lee Jae-yong and Chung Eui-sun are scheduled to visit Saudi Arabia from the 21st to 24th of next month for the Neom City bidding competition. On the 25th, the heads of the four major groups are expected to visit Qatar. They also plan to visit France, South America, and Africa to promote the Busan Expo bid.
Criticism is mounting against the repeated mass witness summons of business leaders every audit season. There are calls for the disappearance of the audit culture that arbitrarily summons business leaders and treats them harshly as if to punish them. Since the introduction of the Rural and Fishing Village Win-Win Cooperation Fund in 2017, the ruling and opposition parties have summoned heads of large corporations every year, citing poor contribution performance. Last year, a lawmaker from the National Assembly's Environment and Labor Committee selected as many as 26 heads of large corporations as witnesses, drawing criticism.
The attitude of lawmakers toward business leaders at the audit sessions is also high-handed. It is common for them to lecture and scold for the cameras rather than listen to facts or opinions, turning the sessions into political shows. As a result, most summoned heads or business leaders simply stay in their seats and leave. Nevertheless, the bad practice of 'summoning first and seeing later' has been repeated, with the average annual number of business leader witnesses increasing from 52 in the 17th National Assembly to 77 in the 18th, 125 in the 19th, and 159 in the 20th. Last year's audit saw over 200 witnesses, and this year is expected to surpass last year's level.
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