Dramatic Gesture
Handing in their resignations, heads of all of the subsidiaries of POSCO, including all internal directors and Daewoo International, resolved to desperately reform its business structure. The group launched an emergency management reform committee headed by POSCO CEO Kwon Oh-joon. POSCO seems to make such a decision in order to revamp its tainted image due to the current prosecution investigation of POSCO Engineering and Construction (E&C), the corruption of its employees, and its ailing subsidiaries.
On May 14, POSCO held its periodical board meeting and finalized its emergency management plan. The committee is comprised of all five in-house directors of POSCO, including CEO Kwon, and chiefs of its five largest subsidiaries, including Daewoo International, POSCO E&C, POSCO Energy, POSCO Chemtech, and POSCO ICT. Before launching the committee, all members of the committee and all heads of all subsidiaries of the group submitted their resignations to its CEO Kwon on the same day.
The emergency management reform committee will be divided into five sub-committees: business restructuring, responsibility management, personnel renovation, common practices of transaction, and ethics. Each subcommittee will come up with specific reform plans, report to the board of directors, and aggressively push ahead with the plans.
Industry sources say that the unprecedented reform measure of the resignations of all internal directors and subsidiaries’ CEOs was taken because its corporate image recently dropped to the lowest level. After the prosecution probe on POSCO E&C, the 10 officials of the POSCO Group and its customer companies have been arrested or issued a warrant. Some say that former Posco Group Chairman Chung Joon-yang will be summoned soon. Now that POS-HiAL filed for court receivership and POSCO Plantec is trying to sign a self-regulatory agreement due to its failure to repay debts, the group is going through the worst time in its history. Accordingly, the top management team seemed to believe that it is impossible to reform its structure with an undigested stopgap measure.
Others say that the group has started reorganization in earnest, as CEO Kwon, who has reached the half-way point in tenure, completed the disposal of non-core subsidiaries and assets.