(Repeats item first published on Thursday with no changes to
By Hyunjoo Jin and Miyoung Kim
SEOUL/SINGAPORE Dec 16 Korea Inc is moving in
slow-motion, mired by the country's political crisis, with a
vacuum in planning and decision making as corporate giants such
as Samsung and Lotte delay traditional year-end management
reshuffles, company insiders say.
Last week, the heads of nine of the biggest conglomerates,
or chaebol, were subjected to an unprecedented 13-hour grilling
by a parliamentary panel investigating the scandal that led to
Friday's vote to impeach President Park Geun-hye.
While no executives have been charged with wrongdoing, many
have been questioned by investigators and the offices of the
Samsung, Lotte and SK groups were raided.
"With no hint on when top management changes will be
announced, what we are seeing right now is a chain reaction that
slows down lots of things," said an executive at a key Samsung
Group unit that makes electronics components, who declined to be
identified given the sensitivity of the matter.
Between them, the nine groups have revenue of 910.5 trillion
won ($780 billion), equivalent to more than half of South
Executive promotions, an annual ritual at the big
family-controlled conglomerates that dominate South Korea's
economy, typically set the stage for new initiatives in the
coming year, with decision-making tailing off in the weeks
With that period of uncertainty stretching on longer than
usual, an employee at a Samsung affiliate said staff had been
occupying themselves reading news reports and surfing the
"There is a definite slowdown in day-to-day work as well,
because companies are holding off on concrete expansionary plans
or changes," said the person, who declined to be named.
The scandal has also sown uncertainty about government
policies and the economy, coming at an inopportune time for
companies such as Samsung Electronics Co Ltd and
Hyundai Motor Co, which are looking to reverse
sliding market share in core businesses.
Hyundai, which is bracing for its fourth consecutive year of
annual profit decline, said it was also undecided on whether it
would announce personnel changes in late December as usual.
"The mood is not great and our chairman had a very tough
time at the parliamentary hearing," said a Hyundai Motor Group
executive who declined to be named. "It would be fortunate if I
don't get sacked in these difficult times."
WHO'S IN, WHO'S OUT?
Park has been accused of colluding with long-time friend
Choi Soon-sil and an aide to pressure big businesses to
contribute tens of millions of dollars to two foundations set up
to back presidential initiatives.
Samsung Electronics, part of the conglomerate that donated
20.4 billion won ($17.5 million) to the two foundations - the
most of any group - has seen delays in setting next year's sales
targets, a company source said, declining to elaborate.
The company has also yet to announce its yearly management
reshuffle. Samsung traditionally announces executive changes in
early December, with some investors expecting a major shake-up
after it was forced to discontinue its fire-prone Galaxy Note 7
It declined to give a timeframe, or to comment on when it
would announce annual personnel moves.
"There's a lot of anxiety," said an employee at Samsung
Electronics' chip division, who said employees were huddling
over lunch to discuss rumours of changes that would normally
have been completed by now.
"I am curious to know whether my current boss will stay, or
I will be moving to another team or not."
A Lotte Group spokesman said its annual reshuffle, which
usually takes place in late December, was likely to be delayed
to next year because of "various situations".
"Our group companies are having more difficulty in setting
up business plans than usual," the spokesman said.
"HOLD TIGHT, LOOK BUSY"
Friday's impeachment vote means the country's Constitutional
Court has up to 180 days to uphold or overturn it, setting the
stage for Park to be the country's first democratically elected
leader to be ejected from office.
Ratings agency Moody's said on Monday that the impeachment
increased the likelihood that no new policy changes would be
implemented until a permanent replacement was in office, which
would weigh on the economy as hiring and investment decisions
are put off.
"The biggest fallout we can expect from this issue,
economy-wise, is companies hesitating to invest," a Bank of
Korea official told Reuters, declining to be named.
Samsung, which usually announces its annual investment plan
around late January, told Reuters in a statement that it was
"currently in the process of making comprehensive plans for next
In 2016, it earmarked a record 27 trillion won ($23 billion)
of capital spending.
South Korea' finance ministry said last week it was
concerned that "domestic issues" may put more pressure on an
economy that is grappling with record household debt and weak
exports, as well as global uncertainties.
The Federation of Korean Industries, which represents big
conglomerates, typically announces annual investment plans by
the 30 biggest business groups in March, but an official there
said it was not clear whether it would be able to keep to that
"The current crisis is similar to or worse than that of the
2008 subprime mortgage crisis," he said, also declining to be
identified. "We are at a standstill."
That has left employees "holding tight and trying to keep
busy" said an official at another Samsung Electronics affiliate.
"Many executives eligible for promotion or other reshuffle
prefer to stay low profile ... you don't want to get unnecessary
attention," he said.
($1 = 1,166.8000 won)
(Additional reporting by Christine Kim and Joyce Lee; Editing
by Tony Munroe and Alex Richardson)