The big five South Korean industry conglomerates came under increasing pressure yesterday when the government-backed Financial Supervisory Commission said it would intervene and issue closure orders for nonviable subsidiaries unless they begin restructuring plans immediately. The commission’s action against Samsung, Hyundai, Daewoo, LG Electronics and Sunkyong Electronics is a way of trying to strengthen the economy by making the main industries work together and share resources in the wake of Asian financial crisis. Recently, the five companies have come under increasing pressure from government officials to analyze their subsidiaries, typically around 20 to 30 for each family – or chaebol – and cut out those only remaining afloat on emergency loans. But their lack of action recently lead the FSC to instruct the main Korean banks to draw up a list of non- viable companies and submit it to them by May 30th for further action. The FSC’s chairman, Lee Hun-jae was due to announce the companies around June 8th but it has now emerged that the commission sent the so-called hit lists back to the banks because they contained no subsidiaries of the big five business groups. Now the FSC is threatening that unless the lists meets its standards, it will have no choice but to enforce corporate closures on its own, despite the fact its stated remit is to supervise banks and the financial sector. A spokesman for the Korean embassy in London told Computergram that the move was indicative of the government’s growing impatience with the slow pace of corporate restructuring by the big five. He added that the new list should be published very soon, some time within the next few weeks. Dataquest analyst Richard Gordon agreed, The government’s been telling the conglomerates to get rid of their non-core businesses for some time. To date, there’s only been any real activity in the Hyundai group and now it looks as if the government’s got fed up and wants the commission to take serious action, he said.
á
