Monday, February 05, 2007

Korean Business Tycoon Convicted for High Profile Corruption

Ordinary people would look for reasons why rich and successful people would embezzle large amount of cash. How are they going to be caught when they control the whole organization?

This news article about Hyundai Motor Co. Chairman Mong-Koo explained the what, the why and what now of the beleaguered business tycoon.

Hyundai Motor Co. Chairman Chung Mong-koo, handed a surprise three-year jail term for high-profile corruption, won't be donning prison garb anytime soon and for now remains in control of the troubled, yet expanding automaker.

Chung, convicted Monday for embezzling the equivalent of more than $100 million in company funds and other charges, plans to appeal the ruling, a process expected to take from six months to two years. He will be free during that time to run the company.

He must use that window of opportunity, analysts say, to reform an organization beset by woes ranging from its authoritarian management structure, chronic labor troubles, and the need to better compete in overseas markets with more harmonious Japanese competitors.

"Mr. Chung has to make the management system change," said Yong Dae-in, an auto industry analyst at Goodmorning Shinhan Securities in Seoul, emphasizing it must become more decentralized and less dependent on him.

The weakness of Hyundai's top-down operating style came into focus in April when Chung was arrested, jailed and grilled by prosecutors for two months before being allowed back into the boardroom following release on bail.

During that time the company, along with affiliate Kia Motors Corp., floundered as decisions related to overseas plants were delayed and problems with its strike-prone labor union festered.

Read the entire story here.