Hyundai Chairman Chung ordered to pay $66 Million damages image

A Seoul court on Friday ordered Hyundai Chairman Chung Mong-koo to pay 82.6 billion won (US$73.1 million) in compensation to his own company for inflicting damage on the top South Korean automaker by unfairly supporting Hyundai affiliates.

The watchdog Fair Trade Commission in 2008 slapped Hyundai Motor with a 50.7 billion won fine for exclusively placing orders with Hyundai’s affiliates – Hyundai Mobis, Kia Motors and Hyundai Glovis and allowing its chairman Chung and his son to unfairly take sizable shares of Hyundai Glovis, a logistics affiliate company.

The court, however, dismissed a Won 1tr claim by minority shareholders in the company.

These shareholders had alleged that Chung Mong Koo and his son Chung Eui Sun inappropriately assumed control of logistics affiliate Glovis, thereby depriving the OEM of potential profits.

The ruling, ordering Chung Mong Koo to pay Hyundai, may encourage more lawsuits by minority shareholders in South Korea, where four of the five biggest companies by market value are controlled by the founding families, said Park Yoon Bae, president of Seoul Invest, a private-equity firm.

“We need to end the unfair practice at conglomerates of managerial control and fortunes being kept in the family,” said Park, whose firm buys small stakes in large South Korean companies and agitates for change.

Photo credit: Life