Consistent Track Record
Last October, it was revealed that most of Daewoo Shipbuilding and Marine Engineering’s (DSME’s) 59 staff who filed for “batch resignations” had their resignations either put on hold or were even promoted. Being afraid of public opinion, DSME received 59 resignation letters in the name of “management innovation,” but when the public attention dwindled, it either postponed the resignations or transferred the staff to subsidiaries with a higher positions. This tactic is receiving criticism for tricking the public.
Crime with Bad Intentions Receives Increased Sentence from the Court
DSME announced that it laid off ten employees, but actually only two took the blame and resigned. Others were promoted to vice presidents and executive directors of Shinhan Machinery, Samwoo Heavy Industry, and DSEC. These companies are subsidiaries of DSME.
For this, the financial sector showed disappointment towards DSME CEO Ko Jae-ho for showing favoritism and paternalism in human resource management.
One source in the financial sector said, “It must’ve been a difficult task for Mr. Ko to be cruel to employees whom he had been working with for many years. However, he still should’ve taken a firm stance, because he is the CEO of one of the main shipbuilding companies in Korea.”
Every year, DSME has expanded its business territory with small-scale businesses such as golf clubs, leisure parks, and food companies, and there are currently 42 affiliates. Most of these companies are unlisted, so employee transfers between DSME and these companies are not easy to track down. It’s a strong possibility that DSME took advantage of this to “hide” the employees in question.
On the other hand, one executive’s sentence increased by one year from a court of appeals last February. He had been accused of violating the property rights of others by embezzlement.
On the reason for increasing the sentence, the court answered, “For the price of increasing the amount of the trade volume, he received 1.2 billion won [US$1.17 million]. He also asked the subcontractors to pay him directly, and used several different bank accounts that were not under his name.”
Former First Lady Too Personally Involved with DSME Personnel
Every year, DSME has been involved in some kind of corruption. One major event was that DSME’s former CEO Nam Sang-tae lobbied former First Lady Kim Yun-ok, wife of former President Lee Myeong-bak, to extend his term.
On November 2010, Assemblyman Gang Gi-jeong from the Democratic Party said, “Nam met the First Lady at Seoul National University Hospital where her brother was then hospitalized. Chief Secretary of Chongwadae called the President of Korea Development Bank (KDB), the major shareholder of DSME, and delivered her message to them. KDB decided to extend Nam’s term.” There are sources that witnessed an exchange of valuables. Chongwadae confirmed that since the First Lady’s brother is close to Nam, he should be close to the First Lady as well. But, it cannot be defined for sure whether it really was lobbying. Nevertheless, Nam was coincidentally able to extend his term.
President Park’s Declaration on Eradicating Gwanpia?
In the midst of compound words like Gwanpia and Gunpia being created after the shipwreck of the Sewol Ferry, the DSME will again fall under the spotlight for criticism. Gwanpia is a dual-lingual portmandeau of “Gwan,” a Korean word meaning “officials,” and the English word “mafia.” Gunpia is similar, with “Gun” meaning military and the rest again referring to “mafia.” (It may be important to note here that the sounds for P and F in the Korean language are the same character, further complicating the understanding of the words.)
Two former navy admirals were hired as full-time advisors of the DSME, and they are receiving several hundred million won annually in salary, plus office space, cars, and corporate credit cards in return. Former executives of the National Intelligence Services (NIS) either have worked in the DSME or are currently in employment. The DSME’s competitors such as Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI), in contrast, have never employed anyone from the military or NIS.
President Park said last May, “To stop the evils of connections between companies and institutions, the employment of retired officials from public service-related organizations will be strongly restricted,” and, “It will be my utmost duty to end all the unethical practices and rebuild Korea.”
Global Embarrassment: Sexual Harassment in the US
This is not the end of DSME’s corruption. Former journalists and college professors that have no previous background in shipbuilding have been appointed as the external directors of DSME.
In March 2012, former Chongwadae Spokesman Yun Chang-jung was enlisted as an external director of DSME. For his entire career, he worked as a journalist.
In May 2013, Yun accompanied President Park to the US, and ended up sexually harassing an employee of the Korean Embassy in the US after he drank until late at night. He was dismissed immediately after the incident, but this case is still under investigation.
As an external director, he is assumed to have received about 5 million won (US$4,907) every month in salary.
A former executive of DSME confirmed, “Yun was recommended to become the external director because one of the associates from Chongwadae came from the same school he graduated from.”
Former Assemblyman Jo Jeon-hyeok has been an external director of DSME since March 2014. He is notorious for disclosing the list of faculty members who had joined the Korea Teachers and Education Workers Union (KTU), also known as Jeon Gyo Jo in Korean, disobeying a court order to withhold that information. His allowance and his monthly salary as a professor are still being confiscated because of this incident. Recently, he ran for the office of superintendent of education but failed to get elected.
DSME is suffering from this many scandals because there is no real owner of the company. After the financial crisis hit Korea in 1999, the DSME was founded in 2000 as a workout program for Daewoo Group, as a way of cutting out excess baggage. So, the shipbuilding segment of Daewoo Heavy Industries was spun off. DSME is the spinoff.
That was a period when many people lost jobs, but at the same time a considerable amount of money from taxes was used as a public fund to save the Daewoo Group. Currently, KDB has 31.5 percent of DSME’s shares, making it the biggest shareholder, but since 2008, there have been rumors that it’s going to sell them. Recently, a public-owned energy company in Russia showed interest in acquiring DSME.