Park scandal leaves Korean business lobby in shrunken role
Budget shrivels as deep-pocket memebers Samsung, Hyundai flee
SEOUL -- The Federation of Korean Industries is scaling down drastically, trying to refresh its image as mainstay members flee the South Korean business lobby over its association with ousted President Park Geun-hye.
Park was removed from office on March 10 and was indicted April 17 on charges of graft, extortion and abuse of power for colluding with confidante Choi Soon-sil to coerce several big businesses into paying "donations" of around 77.4 billion won ($68.4 million) to foundations Choi controlled.
The FKI was tainted in the scandal for its role as a prominent link between government and business, and played a part in collecting the money paid to Choi's foundations.
Four of South Korea's five biggest conglomerates, known as chaebol, have left the business lobby since December, seeing it as having strayed from its intended purpose. LG, Samsung, Hyundai Motor and SK have fled, taking their numerous group businesses with them. Only Lotte has remained.
The four departed multinationals are believed to have funded more than half the federation's 2016 activities budget of some 40 billion won, and it would be difficult for remaining midsize conglomerates to pick up the slack from its core sponsors. The lobby was left with little choice but to cut its budget by 40% this year.
The FKI will consolidate its seven core divisions -- including those for economic and industrial research -- into just three. It will also change its name.
The overhaul is meant to bring the lobby "back to its original intentions, returning it to square one so it can make a fresh start as an economic group," said a person close to the federation. But some predict that the group, without its old faces like Samsung and Hyundai, may be reduced to a social gathering for information sharing.
The federation is offering a voluntary retirement program targeting all its employees and is considering slashing executive pay by some 30-40%, reports South Korea's Yonhap News Agency. Rank-and-file employees may face a roughly 30% pay cut.
The group's current head is Huh Chang-soo, chairman of midsize conglomerate GS Holdings. Huh was due to be replaced in February, but no successor emerged amid the fallout from the Park scandal, and Huh came up to serve a fourth two-year term -- an unusual occurrence.