According to the Korea Times, Automotive News has named its “Auto Executives Of The Year,” bestowing its North American honors upon Ford CEO Alan Mulally, its European award to VW CEO Martin Winterkorn, and its Asian award to Hyundai CEO Chung Mong-Koo. Mulally is credited with improving Ford’s US-market position during a sales downturn, while Winterkorn was honored for his bold plan to move most of VW’s vehicles to only three modular platforms. But perhaps the most controversial award went to Chung, who has improved Hyundai’s standing in the global industry, but has suffered more than his fair share of legal problems in the process.
While most write-ups of the award focus on Hyundai’s sales growth, and critical acclaim for such new products as the 2011 Hyundai Sonata, Chung Mong-Koo has spent the last several years fighting accusations of embezzlement and political fraud. Convicted of raising a $100m slush fund back in 2007, Chung was sentenced to three years in prison, only to receive a presidential pardon for his “contributions to the Korean economy.” In short, because his bribe checks cleared.
And though Chung was able to evade a number of attempts to put him behind bars (no head of a chaebol, or Korean family-owned conglomerate has ever served a full prison sentence), his malfeasance has still hurt his company. Only this year, Mong-Koo was found guilty of “managerial malfeasance” for selling shares in Hyundai Group subsidiaries despite the fact that the share sales damaged the company’s standing. According to the ruling in that case, brought by 14 Hyundai shareholders,
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. 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
In short, Chung Mong-Koo, who once refused a request by his father, former Hyundai Group boss Chung Ju-yung, to step down from his position at the top of Hyundai/Kia Motors, has hurt his company on numerous occasions by acting with little regard to the rule of law and fair competition. Sure, Hyundai is showing many signs of improvement, but naming its CEO as the top Asian auto executive only months after he was fined $60m for managerial malfeasance sends a problematic message. Surely Toyota CEO Akio Toyoda was disqualified for AN’s award due to its CEO’s challenges with a global recall scandal… so why wasn’t Chung disqualified for being charged with managerial malfeasance after being sued by his shareholders?