Chaebol owners use tiny stakes to control business empires

Although the nation’s top 10 chaebol owners own tiny stakes in their business empires, their shady cross-shareholding structure allows their families to wield absolute power through affiliates, recent data found Thursday.

According to Chaebul.com, an online conglomerate tracker, their average ownership stake was just 0.25 percent. Including the stakes owned by other family members, the figure increased to a mere 0.49 percent.

Samsung Electronics chairman Lee Kun-hee, who has been hospitalized since suffering a heart attack in May last year, owned the largest stake of 2.24 percent among the 10 group chiefs, followed by Hyundai Motor Group chairman Chung Mong-koo with 1.89 percent.

Half of the group owners held less than 1 percent stake in their company.

Doosan Group’s honorary chairman Park Yong-gon owned almost no stake, while Lotte Group general chairman Shin Kyuk-ho, who is embroiled in a conflict with his second son over succession, owned 0.05 percent.

Others on the top 10 list included: LG Group’s Koo Bon-moo with 0.07 percent; SK Group’s Chey Tae-won with 0.51 percent; Hyundai Heavy Industries’ Chung Mong-joon with 0.76 percent; Hanjin Group chairman Cho Yang-ho with 1.78 percent; GS Group’ Huh Chang-soo with 1.25 percent; and Hanwha Group’s Kim Seung-youn with 1.12 percent.

Samsung’s Lee family, including the chairman’s only son and heir-apparent Lee Jae-yong and his two sisters, raises the family stake to 5.16 percent, while the combined stake of Lotte’s Shin family is 1.94 percent.

“Despite their tiny stakes, the owner families have no problem in controlling their whole group because of shady cross-shareholdings,” said Chaebul.com CEO Jeong Seon-seob.

“With the latest succession feud at Lotte, which has the most complex shareholding structure, the need for fundamental changes has been reaffirmed.”

The corporate governance issue among the nation’s big businesses has come to the fore again as Lotte, the nation’s fifth-largest conglomerate, has been mired in an escalating succession feud between the founder’s two sons.

On July 27, the father tried to oust his second son from his business empire, but instead was kicked out himself and became powerless. The two sons have clashed head-on to attract more support from the family and employees.

By Lee Ji-yoon (jylee@heraldcorp.com)