Hyundai Motor, First Among the Four Major Groups to Pay Membership Fees to the Korea Economic Association

[Image source=Yonhap News]

Hyundai Motor Group is reported to be the first among the four major conglomerates to pay membership fees to the Korea Economic Association (KEA). Hyundai Motor Group rejoined as an actual member company after seven years since withdrawing from the Federation of Korean Industries (FKI), the predecessor of KEA, in 2017 due to the political scandal.

According to Yonhap News Agency and business circles on the 22nd, Hyundai Motor Group paid the membership fees to KEA earlier this month. This is the first time in about seven years that Hyundai Motor Group has officially paid membership fees to KEA, including the FKI era. The membership fee Hyundai Motor Group paid this time is reported to be around 3.5 billion KRW, which KEA requested this year. The KEA member companies within Hyundai Motor Group include Hyundai Motor, Kia, Hyundai Construction, Hyundai Mobis, and Hyundai Steel, totaling five companies.

Earlier, KEA sent official letters requesting membership fee payments to about 420 member companies, including the four major groups?Samsung, SK, Hyundai Motor, and LG?between late March and early April. The annual membership fee for the first group, which includes the four major conglomerates, is 3.5 billion KRW each.

Last year, the Korea Economic Research Institute (KERI), which had the four major groups as members, was absorbed and integrated into KEA, so the four major groups formally rejoined KEA. However, Hyundai Motor Group is the only one that has actually paid the membership fees so far. Paying the membership fee is seen as a symbol of not only actual membership in KEA but also a commitment to future activities, drawing attention to whether the fees are paid.

SK Group also plans to complete the payment of membership fees as early as this month after reporting to the board of directors of each affiliate. LG Group is also reportedly reviewing internally. However, the exact timing of payment has not yet been decided.

In Samsung’s case, the agenda to pay KEA membership fees was discussed at the regular meeting of the Compliance Committee on the same day but no conclusion was reached. Samsung must obtain prior approval from the Compliance Committee before paying the fees, according to the recommendation announced by the committee in August last year regarding KEA membership.

KEA stated that the payment of membership fees is a matter to be decided by each group and member company, and it is difficult for KEA to intervene directly. Since the payment cannot be enforced forcibly, the deadline for payment is also not clearly set.

Meanwhile, the four major groups, including Samsung and Hyundai Motor, withdrew from FKI one after another when it was revealed during the 2016 political scandal that FKI had requested companies to fund the Mir and K-Sports Foundations.

Subsequently, in August last year, KEA officially changed its name from FKI for the first time in 55 years since 1968 and declared a major transformation to overcome the mistakes of collusion between politics and business.