Recent investigations into irregular business practices at South Korea’s Nonghyup Bank underline the challenges that financial regulators face in ferreting out unfair business deals between affiliates of the country’s big financial groups.
The Financial Supervisory Service said on Wednesday it had discovered through a special inspection that Nonghyup extended a loan of Won6.35tn ($5.7bn) to its parent National Agricultural Cooperative Federation in March last year and offered some of the loan at lower interest rates as a favour.
South Korea’s big retail chains have been feeling gloomy in recent months, as low consumer confidence has squeezed their margins. And growing political pressure is giving them further cause for concern.
On Tuesday, the National Commission for Corporate Partnership, a panel that advises the government on business policy, recommended that companies with more than Won20bn in sales should not enter retail sectors including used cars, magazines, flowers, bicycles, or most sorts of restaurants.
South Koreans have grown familiar with the sight of prominent businessmen being convicted of fraud, only to steer clear of jail. So the imprisonment last August of Kim Seung-youn, chairman of the major conglomerate Hanwha (pictured left being arrested for a separate incident), raised hopes of a shift in the treatment of high-profile wrongdoers.
Now, suspicious types might fear a return to lenient practices, after Kim was released this week due to health problems.
While South Korea’s family-controlled chaebol conglomerates have been at the heart of the country’s rapid industrial development over the past 50 years, today many politicians are calling for a more dynamic small-business sector. The FT’s Simon Mundy explores the challenges faced by businesses living in the shadow of the country’s powerful conglomerates.
South Korea’s privatisation plans are going nowhere ahead of the presidential election in December. Many of the country’s major privatisation projects have failed or lost steam with the Lee Myung-bak administration nearing the end of its five-year term.
The latest example seems to be the failed sale of a $1bn stake in Korea Aerospace Industries, the country’s only aircraft maker.
Samsung, South Korea’s biggest conglomerate, could do with some tips from Sweden’s Wallenberg family about how to become a loved company.
Marcus Wallenberg, chairman of Skandinaviska Enskilda Banken and a member of the powerful Wallenberg family, visited Seoul this week with a large business delegation and met Lee Jae-yong, the chief operating officer at Samsung Electronics and the group’s heir apparent.