LG group reforms family-controlled structure
LG group reforms family-controlled structure
Agence France-Presse Seoul
South Korea's second largest conglomerate, LG Group, nominated a professional manager on Tuesday as head of its flagship unit LG Electronics in a bid to reform the group's family-controlled structure.
LG Electronics said its chairman John Koo, the first son of group founder Koo Tae-Hoi, has been replaced by Kim Ssang-Su, a professional manager who ws promoted from vice chairman .
It said Koo would take control of four units -- LG Cable, LG- Nikko Copper, LG-Caltex Gas and Kukdong City Gas -- to be separated from the group in early October as part of its restructuring.
The spin-off conceded with a report by the Fair Trade Commission that the owner families of LG and other business groups, known as chaebol, exercise more power in affiliated units than their real stakes indicate.
The anti-trust watchdog will use the report as one of the yardsticks for its three-year plan for market reform.
The family that owns South Korea's largest conglomerate, Samsung Group, holds an effective 29.7 percent controlling share although the family has only an average 6.8 percent stake in all Samsung units, it said.
LG's owning family has only an 18.2 percent stake but their voting power comes to 44.2 percent, the watchdog said.
"I will do my best to turn LG into one of the world's three largest electronics and telecommunications businesses by 2010," LG Electronics new chief executive officer Kim Ssang-Su told reporters.
Koo's resignation followed LG's unsuccessful attempt to strengthen its market position in South Korea's saturated telecoms industry by taking broadband service provider Hanaro Telecom under its wing.
LG has been engaged in intense competition with its rival conglomerate SK Group, which saw several of its top executives landing in prison this year over an accounting fraud scandal.
South Korea's once-booming high-tech industry has been struggling to tide over a period of slow growth and weak consumption caused by an economic downturn.
The watchdog has launched an intensive probe into unfair cross-unit transactions, insider-trading among group affiliates and other illegal business practices by top conglomerates.
Critics say conglomerate owners have been engaged in illegal moves to evade taxes by transferring wealth to their offspring.
The conglomerates, whose reckless expansion helped cause the 1997-1998 economic crisis in South Korea, have been under pressure to disclose their detailed ownership structure.