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group founder Koo Tae-Hoi, has been replaced by Kim Ssang-Su, a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.