The Chaebol Returns To The Presidency 1967 [EN]: Chapter 73

73. Self-Reforming a Chaebol

The nation was buzzing as the President’s testimony at the National Assembly was broadcast live.

The weight of the presidency slightly intimidated the committee members at the National Assembly hearing.

A member of the opposition party asked,

“What is the purpose of the President voluntarily appearing as a witness at the National Assembly audit?”

“The construction of the highway, steel mill, shipyard, nuclear power plant, the purchase of oil tankers, and the additional dispatch of troops to Vietnam and reconstruction projects all originated from my instructions. I thought that having the person in charge directly explain to the situation to the people would reduce unnecessary disputes.”

“Why did you concentrate the work on Hyunse [a large South Korean conglomerate, similar to Samsung or Hyundai] in this era?”

“The national budget is finalized in the previous year. It does not include unexpected diplomatic expenses. As you know, international affairs have been turbulent over the past year. Countries were created, and borders changed. There was not a single penny budgeted for diplomatic security to anticipate this.”

“…….”

“If we had not built the steel mill and the highway, the Vietnam reconstruction project would have been difficult. If Korea had not declared the 7th mining zone [a disputed area in the East China Sea] and effectively controlled it, Yuldokuk would not have been able to separate and become independent. Who could have predicted these issues a year ago?”

“Hmm….”

“Politics is a living thing. We cannot only do what is stipulated in the national budget.”

“Shouldn’t you receive supplementary budgets or subsequent approval from the National Assembly?”

“That is the correct point procedurally. However, there are times when even that is not enough due to the urgency. Also, there are diplomatic issues that need to be handled confidentially. Now that the international situation has stabilized to some extent, I am here today to comprehensively seek approval.”

“Why did you give preferential treatment to the Hyunse Group, claiming it was a national issue? Isn’t this a drawback of meritocracy?”

“It is true that I focused on Hyunse. The criticism of collusion is valid, given Hyunse’s absolute share of overseas and domestic orders.”

“…….”

“However, no bribes were exchanged. Because there was no national budget, Hyunse was the only company willing to undertake construction on a deferred payment basis for decades. From a company’s perspective, they took on the orders prepared to risk bankruptcy. In government-led projects, corruption involves receiving bribes from the contractors, but in this case, the government is in debt. Hyunse bore the full responsibility for the bankruptcy, not the government. Why would they offer bribes to such a president?”

The National Assembly hearing buzzed.

This time, Representative Choi from the opposition party asked,

“Ahem, why was only Hyunse taken to the American spacecraft launch?”

“It was to connect Hyunse to the aerospace industry. In fact, we have signed a contract with NASA to dispatch talent for aerospace technology.”

“How can a country that can’t even make cars properly make airplanes, let alone spacecraft? Korea doing what the United States and the Soviet Union do?”

“Why can’t Korea do it?”

“…….”

“Rocket technology is directly related to missile defense technology. Also, if oil is extracted in earnest from the 7th mining zone, we can sell the crude oil and pursue artificial satellite projects and joint lunar exploration with NASA in the United States. We need to dispatch technicians now to acquire the technology.”

“…….”

“The problem is not meritocracy, but unfair competition. If you are excellent in fair competition, you will inevitably prosper. Isn’t that the strength of capitalism?”

“Yes, there are procedures to be followed in state affairs, and in some areas, those procedures have been ignored. There are also large sums of money that have not been accounted for under the guise of security and diplomacy. Is this the transparent state administration that the President usually emphasizes?”

“Then, are you, the members of the opposition party, confident that you can handle the aftermath after disclosing it?”

“Hmm, hmm.”

“I admit the non-disclosure. That is also something that happened because of my instructions. That is why I am taking responsibility. I am here to seek approval from the people, even now, for the various issues where procedures were not followed.”

“You keep saying approval, approval, but how exactly are you going to get approval?”

“Although it is not in the current constitution, I will ask the people’s opinion through a national referendum on interim confidence or impeachment.”

“Impeachment?”

The National Assembly hearing buzzed at the words interim confidence, impeachment, and resignation.

The President said,

“The presidency is the pinnacle of officialdom, but it is not the pinnacle of my life. Heroes are not made by me, but by history and the people. I came out here to be honest as a human being before being a president, and the people will judge. If there is a vote of no confidence, it will be considered impeachment, and I will resign immediately. However, I hope that the members will protect sensitive diplomatic issues.”

“Doesn’t impeachment require more than 2/3 of the National Assembly seats? The ruling party has much more than a majority now, so isn’t this just a show from the start?”

“Then how about a national vote of confidence?”

“How can we conduct a vote of confidence that is not in the law? What about the national treasury that will be spent? Will the Hyunse Group pay for that too?”

“If it takes time to create a law and the national treasury is wasted, wouldn’t it be possible for the ruling and opposition parties to agree on selecting a fair public opinion research institution and conduct a survey of more than 10,000 people nationwide?”

Everyone watching the National Assembly hearing was taken aback by the President’s willingness to stake his presidency, but the opposition party was the most taken aback.

The political offensive had faded because the President was directly asking for the people’s opinion with his position on the line.

President Jung, who watched this, closed his eyes tightly.

And he made a decision.

* * *

President Jung’s Residence.

President Jung’s eight sons arrived urgently at his emergency summons.

The eldest son said,

“Father, what’s going on?”

“I have made a significant decision. I thought you should know, so I called you here.”

“…….”

“I will be spinning off the Hyunse Group by industry.”

The assembled sons were busy managing their expressions at this point.

They anticipated that they would finally receive the company divided and inherited.

However, the sky fell with the next words.

“And I will separate ownership and management.”

“Yes?”

“I will split it into shipbuilding, civil engineering construction, housing construction, energy, aerospace, and oil refining and chemicals, and entrust them all to professional managers.”

“Professional managers? Then are we becoming managers?”

“You? You can also apply for the professional manager open recruitment.”

“Open recruitment? Then are we taking a test?”

“It’s not just about taking a test on paper. We will comprehensively judge your experience, vision, and ability.”

“Father, what about us?”

“If you have the ability, challenge the open recruitment.”

“Why are you giving the family business to others, Father?”

“What family business? Do you know how to make oil tankers?”

“…….”

“Have you ever paved asphalt?”

“…….”

“Have you ever won overseas orders?”

“Father….”

“You don’t have any skills. Is inheritance a family business?”

“Still, shouldn’t blood be thicker than water? Why are you giving it to others?”

“Don’t you know about the merit-based Republic of Korea? Moreover, we are a large corporation that has to compete with global companies. It’s a fierce battlefield where we might barely survive even if we entrust it to excellent managers. What competitiveness is there in succeeding just because your name is on the family registry?”

“…….”

“As a company grows larger, its social responsibility also grows.”

“…….”

“Still, since you are the children of a chaebol [a large South Korean conglomerate] family, I will give you each a house. But now, you have to fend for yourselves. Or challenge the open recruitment for managers. There are no special favors. Start from scratch. I also started with nothing.”

“Father~”

The children wailed like a funeral home, but President Jung was cold.

Perhaps it was a decision that was possible because he was a regressor.

* * *

Hyunse Headquarters.

President Jung announced in front of reporters.

“I will announce the reform of the Hyunse Group.”

The reporters naturally thought that he was distributing the inheritance early.

“First, the Hyunse Group will be spun off into eight specialized groups: shipbuilding, aerospace, civil engineering construction, housing construction, plant construction, oil development, shipping, and oil refining and chemicals. We will stop the ‘too big to fail’ octopus management [a business structure where a company’s various divisions are interconnected through circular investments, making it difficult to dismantle or fail] of circular investments and take extraordinary measures to survive in the world market, competing solely on technology.”

Even at this point, the reporters thought that he was handing it over to his eight sons while taking notes.

“Second, we will separate ownership and management. I will step down from the management front.”

The audience stirred at the word step down.

“Professional managers in eight fields will oversee the management. There is no hereditary family-controlled chaebol in the Hyunse Group.”

The reporters were in chaos at the bombshell announcement.

Questions poured in.

“Is your retirement from management taking responsibility for the Hyunse preferential treatment controversy?”

“To some extent, yes. However, family control only works domestically and not in the global market. It is a determination to compete solely on expertise.”

“How will you maintain ownership? Shouldn’t you give up ownership if you are stepping down?”

“I thought about that too, but no matter how much I thought about it, I couldn’t see a company without an owner doing well. Isn’t the inefficiency of communist countries precisely the lack of an owner? Also, without an owner, we could be subject to hostile M&A by foreign companies.”

“…….”

“One American bank can buy all the shares of our top 10 companies. If the major shareholder does not maintain a certain stake, we cannot prevent a forced takeover.”

The reporters nodded.

“Another reason is the management monitoring function.”

“What does that mean?”

“A professional manager is, in a word, a salaried employee. If they do well, they continue, and if they don’t, they are out. During their term, they may sell important technologies or know-how to external companies or colluding companies for a higher price. If there is no owner, who will check that?”

“…….”

“I will maintain a large shareholder stake and act as chairman, monitoring and advising professional managers. We expect the period for spinning off and newly listing the shares to be three years.”

“If you don’t pass it down to your children, what will happen to your children who are working in important positions at Hyunse?”

“I will leave it to their individual opinions. However, I will not give a single share to my children. I will not stop them if they want to challenge becoming a professional manager. The opportunity for competition is fair.”

That day, newspapers and broadcasts were plastered with the Hyunse Group’s spin-off and the introduction of a professional management system.

– Hyunse President Jung Declares Retirement!

– Hyunse President Jung Declares the End of Family Succession!

– Hyunse’s Declaration of Liquidating Octopus Management Shocks the Business World!

– Hyunse to Become Independent as Professional Companies.

– Is This a Signal Flare for Chaebol Reform?

* * *

Opposition Party Headquarters.

Newspapers with Hyunse articles decorating the front page were piled high.

The leader of the opposition party licked his bitter lips.

“President Jung is taking responsibility instead of the President.”

“All the arrows are turning back to the opposition party, Chairman.”

“That’s what I’m worried about. To make a bombshell announcement during the National Assembly audit, he really played a trick on the opposition party.”

“And according to the emergency public opinion poll, the National Assembly audit seems to be over, Chairman. The President’s approval rating is 81%.”

“Sigh~ That’s what I’m saying.”

“What about the President’s interim vote of confidence?”

“In this state, the opposition party will be beaten. Let’s find an excuse to back out, pretending we can’t win.”

“I understand, Chairman.”

The business world was in a state of panic and confusion.