Will FKI find way to transform?

Facing the worst-ever crisis over its suspected links with President Park Geun-hye’s embattled confidante, the Federation of Korean Industries is to hold a meeting of business chiefs this Friday to find ways to transform itself.

The club for the richest and most powerful South Korean capitalists has faced mounting pressure in recent weeks to disband or radically reform, since prosecutors began questioning FKI officials whether the group coerced its member conglomerates to donate a combined 80 billion won ($70.5 million) in funds to Mir Foundation and K-Sports Foundation. The two nonprofit foundations were allegedly controlled by Choi Soon-sil, a personal friend of President Park Geun-hye, and are suspected of having acted as a cover for her alleged appropriations.

Civic group members demand the Federation of Korean Industries disband in front of the FKI‘s head office in Seoul, Tuesday. (Yonhap)

Earlier this year, the FKI was also probed for its alleged funding of extreme rightist group the Korean Parent Federation.

With political circles and civic groups criticizing the FKI as having become “a money collector for the administration,” conglomerates’ top heads are expected to gather at the FKI’s conference center in Yeouido to discuss how to reform the business lobby group and who should become the next FKI chairman, news reports said. GS Group Chairman Huh Chang-soo’s term as FKI chairman ends in February next year.

How many chiefs will actually participate in the meeting remains unknown. The FKI sent invitations to 18 conglomerates.

However, observers say the meeting may not produce fruitful results because members representing Samsung, Hyundai Motor, SK, LG and Lotte are expected to skip the upcoming meeting, as they have done for many years.

Founded in 1961 with the government’s backing, the FKI has played a pivotal role in pushing industrial projects for fast growth of the Korean economy. However, the transparency of the operation has been at question since the FKI has been virtually free from outside monitoring on its use of corporate funds.

Experts have advised the FKI to become an economic think tank instead.

Some have also suggested the Korea Chamber of Commerce and Industry, one of five business groups in Korea, absorb the FKI, while others say the FKI should follow the steps of Japan Business Federation Keidanren, which was transformed into Nippon Keidanren, a new entity, in 2002 to enhance policy research and social corporate responsibility.

FKI members mostly agree the group needs a radical reform, but a majority of them, or 82 percent, opposed the idea of disbandment, a survey by Maeil Business of top 40 member companies recently found.

By Kim Yoon-mi (yoonmi@heraldcorp.com)