[INTERVIEW] Lawmaker spearheads chaebol reform

Rep. Park Yong-jin of the ruling Democratic Party of Korea speaks during an interview with The Korea Times at his office in the National Assembly, May 10. / Korea Times photo by Park Ji-won

By Choi Ha-young

The "water rage" scandal involving a Korean Air heiress rocked the nation, giving rise to consecutive demonstrations staged by company workers. Koreans were enraged by the latest tantrums of Cho Hyun-min, a former senior vice president of the family-run carrier, which already came under fire in 2014 for her older sister's "nut rage" incident.

Rep. Park Yong-jin, a first-term lawmaker of the ruling Democratic Party of Korea (DPK), said the simmering anger should target the fundamental and structural root of such scandals so as not to end empty handed.

"It's such an illusion that the two heiresses' ethical lapses or psychological problems are viewed as a fundamental reason," Park said in an interview with The Korea Times at his office in the National Assembly, last week. "The scandals were superficial phenomenon of the chaebol system, in which a handful of founding family members have abused their authority."

Park, a member of the National Assembly National Policy Committee in charge of inspecting financial institutions and private firms, believes that political parties need to persuade angry citizens to seek a better economic system. "Like American President Theodore Roosevelt who boldly adopted trust-busting policies, political leaders should be bold in reforming the current chaebol system."

Rep. Park acquired the nickname of "chaebol sniper," following his parliamentary activities during the Assembly audit in October last year. There, the lawmaker took issue with borrowed-name bank accounts owned by the Samsung Group's ailing Chairman Lee Kun-hee.

An intraparty taskforce led by Rep. Park with a goal to impose fines on owners of bank accounts dropped the curtain May 2, after successful mission. As a fruit of its six-month activities, the nation's largest conglomerate had to pay overdue taxes ― presumably over 100 billion won ($93.28 million) ― and is expected to pay more as new "accounts" have come to light yet.

Still, the ruling party lawmaker agrees with critics who say the liberal Moon Jae-in administration's chaebol reform has "failed to impress." The core reason for this sluggish reform is resistance from the bureaucracy, he alleged.

"For example, Financial Services Commission (FSC) head Choi Jong-ku has been an obstacle in renovating the nation's financial system," Park stated.

Choi, appointed by President Moon, had been reluctant to revise regulations governing the insurance industry. The existing regulations made it possible for Samsung Life Insurance to hold an 8.24 percent stake in Samsung Electronics, which was needed to consolidate Samsung heir Lee Jae-yong's control over the group.

Park has taken issue with the regulation, citing laws that prohibit financial companies from obtaining over 3 percent of non-financial firms. Choi, however, refused to revise the regulation. Park called such a move the "accumulated evils in a bureaucracy."

"Reform of organizations like the spy agency, prosecution and the police are easier compared to reforming economic and financial bodies," he said. "Both conservative and liberal administrations have failed to revamp the economic authorities, because it requires expertise and in-depth knowledge of economics and finance, as well as a determination for reform."

Tiger-like FSS Governor

In this regard, Park pinned high hopes on the newly inaugurated Financial Supervisory Service (FSS) head Yoon Suk-heun. When disgraced FSS chairman Kim Ki-sik resigned, Park said a "tiger" would replace a "wolf." After Yoon's appointment, Park said the 70-year-old professor was the right person for the job.

"For thorough reform of the financial circle, understanding of the market and leadership to persuade government officials are a must, like a tiger reigns over the mountain. A wolf can bite and attack opponents, but it can't persuade others," Park noted.

As seen by the appointment of Yoon, Rep. Park expects the Moon government ― which is now concentrating on the denuclearization of North Korea ― to slacken the reins on chaebol in the coming years.

Park paid particular attention to FSC chief Choi's recent remarks recommending Samsung Life Insurance to sell its Samsung Electronics stocks. The Ministry of Justice abruptly altered its position on a revision of the Commercial Law, which is under discussion in a bid to protect small stockholders' rights.

"Such alternations of stances reflect the administration's increasing attention to chaebol reform," Park said.

New era of growth

Asked about the ultimate goal of chaebol reform, he accentuated the need for renovating the existing system, ruling out the dissolution of the family-run conglomerates.

"I believe that Samsung Electronics is the only organization which is capable of leading the Fourth Industrial Revolution," he said. "If the company stops agonizing over how to maximize the heir's authority with insufficient shares, it will be able to put a priority on technology development and future-oriented initiatives."

The changes will bring about palpable changes for ordinary people as well. Small- and medium- businesses here, which are making their profits by supplying goods to conglomerates, have no motivation for technology renovation, he said. Conglomerates have forced them to keep their products cheap, in order to maximize benefits for themselves.

"Chaebol reform would vitalize the Korean economy, opening up a new era for Asia's fourth largest economy," Park said. "What I am dreaming of is not a revolution or dismissal of chaebol companies, but continuous efforts to correct wrongdoings," he said.

"Obviously, the family-run conglomerates had a leading role in achieving the rapid growth of the Korean economy. However, the food we ate yesterday may have gone bad," he added.

The lawmaker was unsure as to whether the professional manager system is superior to the family-run system. Still, the nation should not tolerate factors that harm the efficiency of the market economy, he noted.

"The second and third generation descendants of the founding chief have ruled the conglomerates through cross-shareholdings, simply thanks to the same DNA structure as their fathers," he said.

Former street activist

Before joining the Democratic United Party ― the predecessor of the DPK ― he was a founding member of the progressive Democratic Labor Party, following his longtime devotion to the labor movement. He clinched a parliamentary seat after being defeated in the 2000 and 2008 general elections, in which he ran as a candidate of nonmainstream progressive parties.

As a lawmaker of the ruling party with 121 lawmakers, he aims to institutionalize the changes that he dreams of.

"The proposals for chaebol reform have been discussed for decades but they were never implemented. The minor progressive parties can raise their voices, but it's hard for them make rapid changes. As a ruling party lawmaker, I will do my best to make tangible changes."

Despite his transformation from street activist to politician, he maintains frequent contacts with citizens, as part of an effort to get them to understand the complicated problems of the chaebol system. As of Thursday last week, Park completed his 15th meeting with grassroots organizations and labor unions, primarily on the chaebol issues. He aims to carry out 100 lectures on the issue.

"After an hour lecturing, I could figure out that audiences could see the structural problems beyond the 'water' and 'nut' rage incidents at Korean Air," he said.