Hyundai appears to be drawing up its own version of a constitution. The first on the list was “Quality shall be paramount” (moderately successful) and the second on the list is now “We shall work together with suppliers”. Hyundai’s corporate mothership has announced that it has signed a “fair trade agreement” with its 2368 suppliers. “The deal has paved the way for Hyundai-Kia Automotive Group to establish a fair trade order with partner companies and promote mutual growth through co-existence and cooperation,” said a company spokesperson. They also added that this is the first time a single company has agreed on a fair trade pact such a large number of firms. Before we break out the record books, which the “fair trade” aspect might possibly be fresh, the notion of positive, longstanding closely-knit relationships between industrial firms in Asia are a big part of the region’s manufacturing history. While I commend Hyundai for some serious long-term planning, how much of this was ethically motivated and how much was damage control? Sure Hyundai is promising transparency now. After their chairman stole $100 million for a secret bribery slush fund, and then received a pardon from the South Korean president, a former Hyundai executive.
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If I recall correctly, the Chairman of Hyundai didn’t actually embezzle $100 million for his own use. He took responsibility for the actions of his company, I know – a novel idea for any American corporate leader…
It was more along the lines of misappropriating funds on purpose for the purposes of making friends in high places and influencing the right people.
This is known as PACs in political and corporate circles in the United States where it is not illegal, as it (technically) is in South Korea.
I may be wrong – it wouldn’t be the first time. But this is as I understood it after researching it a bit.
As for Hyundai (and not so much Kia – yet) – yes the quality of the cars is improving EVERY YEAR. My wife’s had a 2002 and now we have a 2007 Sonata, and the quality is far better on the new car – the old car was only “moderately better” than Detroit krapp, whereas the new car is light-years ahead. Up with Honda and – gasp – probably better than Toyota!
Menno:
I think you’re being WAY more polite to the South Korean Chairman than is necessary.
He wasn’t forming a PAC. It was for BRIBING government officials.
And such misappropriation in South Korea isn’t just [technically] illegal. It’s illegal illegal. As in, a felony.
Even if it “shouldn’t” be illegal (though I think forming a secret slush fund with corporate assets for paying off government inspectors should be illegal), it was the letter of the law in South Korea. And he should be bound to it, just like everyone else.
He would be in prison if not for being pardoned by the President.
Maybe they have learned that they need more transparency and fair trading rules to minimize the possibility of making such mistake in future.
Thanks for the input Justin.
Hi Justin,
Perhaps I was being too polite, as you say; certainly any illegal doings is a bad thing in anyone’s book.
But looking at the world in a realistic manner, this kind of thing is very common, even in the United States where it is most certainly illegal (unless ‘codified’ with PACs and such).
Interestingly today in the TV news (of which I watch nearly zero) the Interior Department was caught doing tons of illegal stuff and plenty of people appear to be ready to be raked over hot coals for it (not literally, of course).
Yes, Hyundai’s Chairman was pardoned. You have to wonder why the sudden sea-change in South Korean ‘business norm’ re: why he suddenly was charged, though.
Perhaps he forgot to bribe the right people or there was an election and newbies came in or something.
…………….a crook is a crook, illegal is illegal no matter how you put it.
I don’t agree that “a crook is a crook”.
The government official who accepts a bribe for his own personal gain is a much bigger crook than the CEO who offers it. The CEO is (sort of) doing his job, using company resources to advance the company’s competitive position in the most efficient manner possible. The government official, however, is the one breaking his own rules and violating the public trust he was paid to protect, purely for his own personal gain. There is no comparison.
?????
I really don’t see how this is hard to understand, this guy “stole $100 million for a secret bribery slush fund”.
He stole and he got caught. That makes him a crook. I don’t see how politely looking the other way and making excuses for it is helping anyone.
There is no denying what Chung Mong-Koo did, but we need to shine some light on the other side of this transaction too; the government officials who took the bribes. As a South Korean taxpayer I would be a helluva lot more angry about that than about how Hyundai’s money was used (or misused) to advance Hyundai’s interests. The latter is a problem for Hyundai shareholders, who frankly have little to complain about compared to shareholders of Toyota, or General “Look out Below” Motors.
Maybe that’s the real reason this whole thing is being allowed to blow over; to save the government some embarrassment.