Chosun Ilbo Reports that SK Group See Record Exports
Woohoo! Record exports from subsidiaries of SK Group have been reported, according to the Chosun Ilbo. All is well, right? Business as usual, right? Seems so. And that is exactly the problem.
Kenneth Lay of Enron in Jail. Parole Denied. Chey Tae-Won? Free as a Bird.
At the time of the Enron accounting scandal, CEO Jeffrey Skilling was incarcerated. He is still incarcerated, and recent attempts to gain freedom have been denied. In fact, Skilling was denied even temporary release from prison to attend his son’s funeral. In another accounting scandal, Tyco CEO Kozlowski has had parole requests repeatedly denied. It is not an exaggeration to suggest that SK Group is more important than those companies were to the U.S. economy. Nevertheless, management wrongdoing was punished because the victims were the system, and the shareholders. Mr Chey? 1 year in jail.
Worse Than the Crime? The Mockery.
Let’s presume that the past is the past. However, the current investigation is now. And it has been very curiously quiet. If the board wants to compensate Chairman Chey USD 90,000,000 for his work as CEO of SK Group, then that is one thing. However, to use those company funds without supervision or approval of the Board of Directors is quite another matter. That is precisely why law enforcement needs to be involved. Law enforcement pursuit of white-collar crime in Korea has been almost comical.
The National Pension Fund Must Be the Police
There is almost no other choice in the matter. There are corporate governance rules in Korea. However, the Board of Directors at each company usually acts as a mere puppet of the CEO. This has been a problem in other countries, such as the U.S. However, in Korea, there are a few very, very influential institutional investors. At the top of the list is the National Pension Fund, and the Korea Investment Corporation. Those two bodies manage much of the national pension fund, as well as the foreign reserves of South Korea. Those funds were largely earned by the citizens of Korea and employees of Korean corporations.
Previous attempts at this have largely failed. Carl Icahn attempted to reform Korea Ginseng & Tobacco, without success. However, that was different because the National Pension Fund sided with management at that time. However, now, at this time, the NPF and the KIC must become the de facto enforcers of corporate governance law. It is clear that the police and the justice system is powerless.