[Editorial] Lingering crisis in Hyundai group

Hyundai Engineering and Construction Co. has managed to defuse its immediate liquidity crunch, but public concern over the future of the Group is yet to be dissipated. The HEC was able to resolve its` crisis with the help of bank discounts, but the Group is still in an acute need of new capital funds.

In order for Hyundai Group to recover public confidence the following three points must be addressed. First, inter-family disputes should be settled through spin-offs of its subsidiaries. Second, intensive self-rescue programs need to be implemented, and third, transparent management in terms of its` capital funds and others.

There is no denying that Hyundai, heretofore, has presented its restructuring plans from a strategical dimension, weighing the division of wealth among the sons of group owner Chung Ju-Yung. Hyundai Group announced that Chung and his two sons would withdraw from managerial positions in late May and entrust its management to outside professional managers.

However, it was observed that the adopted managers were no more than "vassals" of the group family. For that reason, the government has come to demand the withdrawal of the recruited managers. This is why the group failed to win confidence from the market in regard to its commitments to govern structural reform as well as plans for its corporate restructuring.

Hyundai Heavy Industries has filed a complaint against Hyundai Securities and Hyundai Electronics Industries, citing that there are inappropriate financial transactions among the subsidiaries. Division of the group subsidiaries must be achieved in the shortest possible time to ward off damages to the company.

As for Hyundai Motor, there are some potential problems that must be addressed. Rival sides are poised to trigger strife for seizing managerial rights. Settlement of the Hyundai question must be resolved once and for all through the facilitation of the separation of its warring subsidiaries.

Nonetheless, Hyundai, despite its serious internal woes, is now engrossed in inter-Korean projects requiring huge funding amounts with little prospects for profiteering. This is another factor leading to downgrading its credibility.

The Hyundai situation must not be prolonged. If they follow in step with the bankrupt Daewoo Group, though the nation has completely recovered from the Daewoo mishap, it could spell out a greater national disaster.