BUSINESS

Namyang Dairy chairman resigns after yogurt COVID-19 prevention claims

By Jo He-rim

Resigning chairman apologizes for inaction on several other controversies in bid to regain public trust

  • Published : May 4, 2021 - 16:15
  • Updated : May 4, 2021 - 16:22

Namyang Dairy Products Chairman Hong Won-sik announces he will resign from his position during a press conference in the company headquarters in Seoul on Tuesday. (Yonhap)

Namyang Dairy Products Chairman Hong Won-sik offered his resignation Tuesday, after the company came under fire for the claim that its yogurt drink Bulgaris can help protect from COVID-19.

Hong, who took over the company from his father, the late founder Hong Doo-young, also said he will not hand over management rights of the company to his children.

“We have received much love from the public as the oldest private dairy company. But I failed to fulfill the expectations of the consumers, as I was not able to break away from outdated thoughts and worked only for the growth of the company,” Hong said in a press conference.

”I will resign from my chairman position to take responsibility for all those things. Also, management rights will not succeed to my children. I sincerely apologize for this belated decision.”

The elderly businessman is not in charge of daily business operations, but he and several of his family members have exerted extensive influence with a combined stake of 53.8 percent.

Hong’s eldest son, Namyang’s managing director Hong Jin-seok was also dismissed from his position last month for allegedly misusing the company’s funds for personal expenses.

Hong also apologized to the company’s employees and franchise operators.

Namyang Dairy Products Chairman Hong Won-sik announces he will resign from his position during a press conference in the company headquarters in Seoul on Tuesday. (Yonhap)

Namyang Dairy, one of the leading dairy firms here, is currently being investigated by police for violation of the food advertisement law, a complaint filed by the Ministry of Food and Drug Safety. The city of Sejong also forewarned Namyang Dairy that it will issue a two-month business suspension of the company’s factory there, which is in charge of producing about 38 percent of the company’s products.

Lee Kwang-bum, Namyang’s managing director and chief executive officer, also offered to quit, sending an email to employees on Monday.

In a symposium on April 13, Namyang’s research institute chief claimed that the company became “the first firm in the country that has discovered fermented dairy products are effective in preventing influenza and COVID-19 viruses.”

“Our experiments showed that Bulgaris helped remove the influenza A (H1N1) virus at a 99.999 percent rate of success, and COVID-19 at a 77.8 percent success rate,” Park Jong-su, the institute chief, had said during a symposium.

The given experiment was conducted by pouring the yogurt drink on monkey lung cells.

Following the announcement, the company’s shares spiked by as high as 30 percent, and Bulgaris drinks sold out in many retail stores across the country.

The Korea Disease Control and Prevention Agency and other experts questioned the validity of the claim, as well as the intentions behind why the company would release research results that had not been clinically demonstrated.

After the Food Ministry filed a complaint against the company, the police enforced search and seizures into Namyang’s six offices, including the Seoul headquarters and the research institute in Sejong on Friday.

While making his exit, Hong expressed regret for not taking proper actions over several other controversies the company had been embroiled in over the past years.

“I should have assumed a more active stance over other disputes, such as the workplace power abuse case in 2013 and my niece Hwang Ha-na’s (drug use) case,” he said, apologizing for failing to meet public expectations.

In 2013, the dairy giant took flak when a voice recording revealed a Namyang salesperson forcing distributors to buy more of the company’s products. A boycott movement started, displacing the company from the top position in the market.

There have also been several libel cases in which Namyang officials and employees were accused of spreading rumors against rival firm Maeil Dairies. In one of them, Namyang was investigated for paying professional cyber trolls to disparage the rival online. At the time, the company issued an apology statement online, but neither Hong nor other executives mentioned the case in public.

By Jo He-rim (herim@heraldcorp.com


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