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Korean presidential bet pledges tighter reins on chaebol
Publication Date : 12-10-2012
Democratic United Party presidential candidate Moon Jae-in announced Thursday that he would tighten regulations on conglomerates as part of his economic democratisation measures aimed at establishing a fair economy.
“The future of the Korean economy I want to achieve through economic democratization, in one word, is a fair economy,” Moon said.
“A fair economy is an economic structure that accentuates the strengths of the market economy, while allowing all the constituents to grow together.”
Toward that goal, he said that he aimed to achieve three main objectives ― a fair market structure, foundations for sustainable growth and fair distribution.
Of the three objectives, Moon focused on establishing a fair market structure, for which he plans to tighten regulations concerning family-owned conglomerates, or chaebol.
Moon said that he would reform conglomerates’ ownership structure, prevent the families of chaebol chiefs from using the companies for private goals and introduce stronger penalties for corporate crimes.
According to the plans, Moon’s government would prohibit cross-shareholding within conglomerates, and set an investment ceiling for the 10 largest conglomerates at 30 per cent of their net assets. State-run companies would not be subjected to the investment ceiling.
Measures regarding conglomerates’ ownership structure also include lowering the legal debt ratio of holding companies to 100 per cent from the current 200 per cent, and cutting the upper limit on non-financial firms’ stakes in financial institutions to 4 per cent from the current 9 per cent.
To prevent chaebol families using the companies for personal gain, Moon said that he would fine all companies involved in unfair in-house transactions, as well as members of the owner families who profited from such actions.
On the issue of strengthening penalties, Moon said that companies that violate fair trade regulations would be issued fines equivalent to three times the incurred damages, limit pardons for corporate criminals and introduce more stringent qualifications for prospective board members.