The fall of Dam Chul-gon

Tong Yang Group founder Lee Yang-koo, who died in 1989, dearly loved his two sons-in-law before his death. Lee had two daughters but no sons of his own, and people around him would even call his sons-in law “like sons” to the tycoon. Business community insiders predicted early on that his sons-in-law would eventually take over managerial control of the conglomerate. Lee’s first son-in-law is current Tong Yang Group Chairman Hyun Jae-hyun, 62, and his second son-in-law is Dam Chul-gon, 56, chairman of Orion Group.

Dam is a third-generation Chinese Korean born in Korea. After studying in the U.S., he joined Tong Yang Cement as assistant manager in 1980 and swiftly climbed up the ladder. He was appointed chairman at age 46 in 2001, when Orion Group was spun off from Tong Yang Group. He reportedly met his wife Lee Hwa-kyung, president of Orion Group, while they attended an international school in Seoul. His elder brother-in-law Hyun served as vice chairman of the Federation of Korean Industries and chairman of the Korea-U.S. Business Council, engaging in robust external activities in the business community. In contrast, Dam has showed up at business gatherings so rarely that he earn a reputation as a reclusive top manager.

Prosecutors say Dam amassed slush funds worth 16 billion won (15 million dollars) and committed misappropriation of funds for private use. He is alleged to have embezzled company funds by colluding with his wife and confidants and fabricating records as if the company paid salaries or severance pay to executives of a fake subsidiary. He is also suspected of improperly using luxury imported vehicles such as Lamborghini or Mercedes Benz leased with company funds for his private use, including commuting for his children. Orion Group belatedly said Dam repaid the 16 billion won that prosecutors say he embezzled or misappropriated with his own money. Simply repaying the money, however, does not absolve him of his crimes.

Dam has played a key role in Orion Group’s robust growth. Realizing the importance of the Chinese market early on, he established a plant in China and developed it into a global confectionary maker. He also diversified the company’s business boundaries from confectionary to other areas such as movies, cable TV, restaurants and catering, and sports. It is regrettable to see that Dam, who was lauded for his outstanding managerial capacity among the sons-in-law of Korean conglomerates, go into free fall in a matter of days. He failed to differentiate his private interests from company interests and spent company funds like his own money.

Entrepreneurs can survive only when they adapt to change in evolving eras. They must shed ill-advised and outdated practices and continue to increase corporate transparency. As companies enjoy expanding influence in a nation and society, Korean society as a whole will see growing demand for holding business people accountable for their wrongdoings.

Editorial Writer Kwon Sun-hwal (shkwon@donga.com)