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(News Focus) FKI faces dissolution due to very act aimed at survival

All Headlines 10:42 December 28, 2016

By Byun Duk-kun

SEOUL, Dec. 28 (Yonhap) -- The Federation of Korean Industries (FKI) now faces a possible dissolution due to nothing but its own act to ensure its survival.

What signaled the possible dismantlement of the organization with 55 years of history was a notice from one of its 600-strong members, LG Group, that it will quit the association, becoming the first major conglomerate to do so.

The FKI building in Seoul's Yeouido (Yonhap file photo)

LG Group was quickly followed by telecommunications giant KT Corp., which too said it will withdraw its membership by the end of the year.

Prior to the announcement by the two conglomerates, Samsung Group, the largest business group in the country, said it would stop paying its membership fees starting next year, and leave the organization as soon as its ongoing projects with the FKI are wrapped up.

What triggered the departure of FKI members was, ironically, what the FKI apparently believed would ensure its survival and prosperity under the incumbent administration and beyond.

(News Focus) FKI faces dissolution due to very act aimed at survival - 2

The business lobby came under heavy public criticism following allegations that it may have worked as a link between President Park Geun-hye and its member firms in what is believed to be an illegitimate fundraising for two sports organizations proposed and controlled by Park's close friend Choi Soon-sil.

The corruption scandal, as part of a much wider influence-peddling scandal involving Park and her friend, eventually led to the Dec. 9 impeachment of the president by the National Assembly.

The FKI maintains its donations were coerced.

"It is not easy for mere private firms to refuse a request (for donations) from the presidential office Cheong Wa Dae," said Huh Chang-soo, head of the FKI and chairman of GS Group, while testifying before a special parliamentary hearing on Dec. 6.

Many, however, believe the FKI and its member companies that donated a combined total of nearly 78 billion won (US$64.5 million) must have at least sought to get on the good side of the president and her administration, which they claim constitutes corruption itself.

In the file photo, taken on Dec. 6, 2016, Kim Seung-youn (third from L, front row) and others raise their hands to express their opposition to dissolving the FKI during a special parliamentary hearing in Seoul. (Yonhap)

What angered even more people was that the Dec. 6 hearing was a near reenactment of a 1988 parliamentary hearing over slush funds of then-President Chun Doo-hwan that were donated and created by many of the companies whose chief executives were called to the hearing held earlier this month, apparently forcing many to believe the very existence of FKI may have caused such a repeat of corruption.

Many lawmakers at the Dec. 6 hearing had demanded the heads of FKI member companies, including Samsung, announce their withdrawals from what started out as a friendly association of local businesses in 1961.

Still, the FKI sought to survive even through a painstaking reform that it says would have transformed it into nothing more than a friendly social gathering.

Even the plan quickly lost support when LG Group, the fourth-largest conglomerate in South Korea, announced its departure.

According to informed sources, the country's four largest groups and also four largest members of the FKI, accounted for some 70 percent of FKI's 49.2 billion-won membership fees in 2015. They include Samsung, Hyundai Motor Group and SK Group.

Shortly after the parliamentary hearing, the FKI called for a meeting of its top 30 members to discuss ways to transform itself. None of the four largest members showed up for the meeting.

This file photo, taken on Dec. 21, 2016, shows members of the Korean Confederation of Trade Unions staging a protest rally in front of the FKI headquarters in Seoul, demanding the immediate resignation of President Park Geun-hye, and a prosecution investigation and arrest of FKI officials and chief executives of its member firms on corruption charges. (Yonhap)

"There is no change to its decision since the group expressed its intention to withdraw its membership from the FKI at the parliamentary hearing," an SK Group official said earlier. "The group is only reviewing the procedures of its departure."

Many smaller firms, including the state-run Korea Development Bank and Export-Import Bank of Korea, have also announced their withdrawals with many others expected to follow.

The FKI, an employer of some 140 workers, apparently cannot let go so easily.

"The FKI is listening to various views of its member companies through various channels, but at the same time, it is doing its utmost to come up with a reform plan for now," an FKI official said, while speaking on condition of anonymity.


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