CJ Group, South Korea’s largest food and entertainment conglomerate, will stop short of announcing its 2015 investment and employment plans due to its leadership vacuum, industry sources said Tuesday.
This move is expected to deal yet another blow to the conglomerate, which has been struggling for years to find new growth engines and promote mergers and acquisitions.
About 20 percent of CJ’s investment deals fell through last year, leading its total investments to drop below the 1 trillion won ($922.3 million) mark for the first time in three years.
The headquarters of CJ Group in Seoul. (Korea Herald file photo)
“Every year in mid-January, we announce our investment and employment scheme. But nothing has been set internally yet,” a high-ranking CJ official told Yonhap. “There hasn’t been a year when we did not make an official announcement, so this is going to be an unusual year.”
The group’s management crisis comes 18 months after CJ Group chairman Lee Jay-hyun was arrested on charges of tax evasion and siphoning off hundreds of billions of won in slush funds.
With the leadership vacuum, a four-member governing committee, including vice chairwoman Lee Mie-kyung and vice chairman Lee Chae-wook, has been filling in for the chairman’s role.
The group recently decided to expand the committee’s role, but such efforts are apparently failing to pay off, with the vice chairwoman now reducing her involvement due to a genetic disease.
“Department heads can sort out their own investment plans, but looking at the big picture and specifying expenditures won’t be easy (without the chairman),” another group official said.
Allowing the vacancy to linger is also draining merger and acquisition deals of its major subsidiaries, including CJ CheilJedang and CJ Korea Express, most of which have been put on hold or suspended during the past two years.
The spotlight is now on the planned executive reshuffle next month, but many are skeptical whether the current situation will improve.
“Unlike other chaebol firms that nurture management specialists, CJ has grown on the back of chairman Lee’s strong one-man owner system,” said a business professor at the University of Seoul, who wished to be only named by his surname Jang.
“Although Lee Chae-wook is likely to become the de facto chairman at this point, it’s not clear how long and how effective that system would last.”
By Suk Gee-hyun (monicasuk@heraldcorp.com)
