[FOCUS] Chung Mong-koo recognized as Hyundai chairman despite health concerns

Lim Chang-won Reporter Posted : 2019-05-15 18:05 Updated : 2019-05-15 18:05
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[Courtesy of Hyundai Motor Group]

SEOUL -- Chung Mong-koo was recognized again as chairman of South Korea's Hyundai auto group after state anti-trust regulators consulted a doctor's note to see if his health has deteriorated so much that he could not participate in decision-making on crucial group affairs.

The 81-year-old has almost disappeared from public eyes last year and this year, sparking rampant speculation about his health. His only son, Chung Eui-sun, has virtually headed the group, which was listed by the Fair Trade Commission (FTC) as the country's second-largest conglomerate with 53 affiliates and assets estimated at 223.5 trillion won ($188.1 billion).

In releasing a watchlist of 34 large business groups, Kim Sung-sam, an FTC director overseeing corporate groups, said Wednesday that Chung Mong-koo was recognized as group chairman, based on a doctor's health report and autographed documents. "We have received the doctor's note on Chairman Chung's health."

There is plenty of room for Chairman Chung to exercise control over his group normally through a person associated with him, Kim said, adding the commission would not launch an independent probe to find out the truth "without any significant and obvious changes in circumstances."

Every year, the watchdog releases a list of large business groups, known as chaebol, with assets of 10 trillion won ($8.4 billion) or more. If there is any change in ownership structure, new group heads should be officially designated. Samsung topped the list with 62 affiliates and assets estimated at 414.5 trillion won. Hyundai stood second, followed by SK Group with 218 trillion won.

With his father staying away from daily group affairs, Chung Eui-sun, 48, has launched a campaign as executive vice chairman to eliminate a conservative group culture, streamline its complicated governance structure and enhance transparency.

Hyundai and some other conglomerates are undergoing a generational change. Of the third and fourth-generation members of conglomerate owners, Chung Eui-sun has been cited by market watchers as a promising next leader who can properly manage the auto group after his father retired.

In May last year, Elliott Management, a U.S. activist hedge fund, at annual shareholders meetings, played a key role in forcing the auto group to put off the proposed reorganization of its complicated governance structure so that Chung Eui-sun can expand his control over the entire group.

However, at a meeting of shareholders in March this year, Hyundai scored an overwhelming victory in a proxy war with Elliott, helped by widespread support from shareholders, including the National Pension Service (NPS) and some advisory groups.

The auto group has proposed the spin-off of the module manufacturing and after-sales parts business of Hyundai Mobis to combine it with Hyundai Glovis, a logistics unit. Elliott has urged the group to create a holding company through a complete merger between Hyundai Motor and Mobis.