By on February 8, 2010

For years, TTAC has argued that General Motors suffers from a profound lack of accountability. Specific instances include the $2b “Fiatsco,” most of Roger Smith’s tenure, and cars like the Pontiac Aztek and Cadillac Cimmaron. Incidents like these helped GM along its decades-long plunge into bankruptcy, unchecked by the lax corporate governance of what came to be called its Board of Bystanders. Hyundai’s CEO may have received similarly lax treatment from South Korea’s criminal justice system, but at least the shareholders are standing up for their investment.

AFP [via Google] reports that Hyundai Motor Chairman, Chung Mong-Koo, has been ordered by a South Korean Seoul Central District court to pay $60 million in damages to Hyundai Motor Company. The suit was brought forward by 14 minority shareholders of Hyundai Motors and a non-governmental group called “Solidarity for Economic Reform.” This suit was brought about because shareholders believe that Chung Mong-Koo and Kim Dong-Jin brought huge losses on the company when, in 2001, Hyundai Motors participated in share sales of affiliates in the Hyundai Chaebol (Hyundai Airspace & Aircraft Co. and Hyundai Hysco).

“The court has recognised the fact that Chung made Hyundai Motor participate in the share sales to head off any threat to the Hyundai Group’s managerial rights, even though it could inflict damage on his company,” Yonhap news agency quoted the judges’ ruling as saying. “This is a case that reveals the problem of family-run management that focuses on the interests of major stockholders and the executives of Hyundai Motor.” If only GM’s investors had taken such proactive steps about the firm’s inept and insular management years ago, they might not have been wiped out in the government’s bailout/takeover.

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12 Comments on “Hyundai CEO Ordered To Pay His Company $60m For Money-Losing Deals...”


  • avatar

    Well, GM’s management has been accused of many things, but embezzlement wasn’t one of them.

    • 0 avatar
      Robert.Walter

      Far as I know, neither was corruption … (didn’t he get a big time-out about 5 years ago for payola? (or am I confusing it with the inter-family stock shenanigans?)

  • avatar
    rmwill

    He is not the first criminal manager of Hyundai. Google them and see. One US executive’s drunken negligence led to the death of a motorcyclist and fled to Korea with Hyundai’s corporate assistance.

    http://www.nbclosangeles.com/news/local-beat/Ex-Hyundai-Exec-Back-in-OC-for-Manslaughter-Case.html

  • avatar
    rockit

    Yes, this is the guy who was arrested for embezzlement and corruption, got free on bail and got a slap on the wrist instead (community service + $1 billion donation to charity instead of 3 yrs in prison.)

  • avatar
    mtymsi

    If GM brass had to pay for all their missteps none of them could have afforded their positions.

  • avatar

    Shareholders in the U.S. have nonbinding authority over the corporation. So the shareholders could have cried all they wanted to but the management was under no obligation to listen.
    Not that I disagree. Why don’t owners/shareholders have any say over how their company is managed? It might have straightened out the banks before they collapsed.

  • avatar
    wmba

    This is what Hyundai is really like. They’re ambitious beyond anything else, and I wait for the day when they have QA problems. Their management has been corrupt for years as a google search will show

    Despite Toyota’s inability to put one foot in front of the other in their current troubles, I don’t get the feeling that they’re corporate wolves. They will eventually fix their problems. Hyundai in the same situation with car problems? You can only wonder.

  • avatar
    ra_pro

    MK,

    Why “embezell” if you can take it legally? That’s the genius of the US corporate system.

  • avatar
    ra_pro

    …And in the meantime while Hyundai management may have been involved in numerous questionable transactions somehow they still found the time to lead the company to ever bigger sales while producing ever more desirable cars. That’s what I call multitasking.

  • avatar
    Detroit-Iron

    Just like voting for the board, every shareholder should get to punch these guys once for every dollar they have lost.

  • avatar
    don1967

    Hyundai’s corporate history is certainly nothing to brag about. But shareholders taking the CEO to task is a lesson the rest of the world could learn from; a positive example of free market capitalism.


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