Investigations Stoking Corporate Fears

H, an executive of A group, who is known to be involved in the Kim Jae-rok lobbying scandal, has lost three kilograms over the last 15 days.

This is because he has hardly had sleep since it was heard that the prosecution will resume the investigation on the Kim Jae-rok scandal, targeting A group, after it finishes its current investigation into the Hyundai-Kia Automotive Group.

“Now, executives are moving very fast to prepare inspections from the Fair Trade Commission and National Tax Service because we have heard that inspections from two bodies will take place after the local election ends,” said H. “The stress is getting to us because we have to keep an eye on what is going on.”

The government pushed the investigation into the Hyundai-Kia Automotive Group without considering the negative effects on the nation’s economy. And many big companies are still not free from the Kim Jae-rok scandal. Increasing suspicion is still hovering around group owners who are known to adopt an expedient way of property succession to their offspring. Because of this, the involved companies are now shivering with fear.

The headquarters of S, H, and L groups which concluded that they might be targeted in the next government investigation are preparing for the prosecution’s questioning and destroyed documents and files that might cause problems. They even teach employees on how to respond to the questions of inspectors.

In regard to this, the chief executives of 10 groups held a closed-door meeting a few days ago and promised to share information and to help each other. In this meeting, the executive members of the Federation of Korean Industries also attended.

Korean companies are in a corner because of oil price hikes and the falling won-dollar exchange rate. Despite this, they can’t afford to handle these challenges because of the government investigation.

The government and ruling party are pushing them to make more investments in social welfare and for the benefit of their affiliated companies. Such inquiries are stressful to the conglomerates.

“The stress we are suffering now even steers our business performance into the wrong direction. But, we haven’t found an answer to solve this problem,” said one group executive.

Despite this, the group owners can’t raise their voices because of the fear that they might get harmed if they are seen to stand in opposition to the government’s direction.

For example, the government asked one economic association to send in an account after the association’s event involved in the government officials were reported through mass media. Since then, the association has refrained from speaking out against the government.

“The current government is so keen on public opinion that it asked for an account whenever sensitive issues were addressed,” said B from this economic association. “Under such circumstances, how could we expect companies to raise their own voices?”

Jeong-Hun Park sunshade@donga.com