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Prosecutors said Monday they have been conducting a confidential investigation of Cho Hyun-bum, an executive vice president of Hankook Tire and son of the tire maker¡¯s chairman Cho Yang-rae, on suspicion of stock price manipulation. Prosecutors said they have not discovered any violations, but there were suspicious areas that need to be thoroughly investigated. Cho, vice president of a company that ranks among Korea¡¯s top 50 businesses, is also the third son-in-law of President Lee Myung-bak. Cheong Wa Dae said Tuesday it believes prosecutors will thoroughly investigate the suspicions.
Among the scions of big business families who are suspected of stock manipulation are LG Group heir Koo Bon-ho, Park Joong-won, son of former Doosan Group chairman Park Young-oh, and the grandsons of the founders of several other prominent businesses.
They are suspected for privately purchasing shares of a Kosdaq-listed company and a steelmaker around this time last year and making it seem as if the business conglomerate was acquiring the stocks or made public inflated business plans to raise share prices. Then they allegedly sold the stocks at the inflated price.
Suspicions of stock price manipulation by the heirs of big business conglomerates, or chaebol, are said to have been circulating around the stock market for some time. People at bourse say around 10 people other than Koo and Park, who have been arrested, and Cho, who is under investigation, have repeatedly engaged in professional stock-price manipulation from mid-2006 to the end of 2007, inflating prices and pocketing anywhere from billions to tens of billions of won. Their usual prey was Kosdaq-listed firms, whose shares are easier to manipulate due to the low volume of traded stocks.
In the case of the steelmaker, whose shares were popular last year on hopes of investments by the chaebol, stocks traded at W90,000 per issue in the spring of 2007 but surged to W1.46 million by August. Some chaebol heirs merely lent their names without buying a single share, in order to lure private investors into buying a company¡¯s stocks.
Businesses and the stock markets have an inseparable relationship. One cannot live without the other. But the chaebol heirs who have been implicated in the latest incident have poisoned the well from which they themselves, as well as their family and hundreds of thousands of employees, depend on for their livelihood.
Worse are the feelings of bitterness and betrayal felt by individual investors who had to face losses due to the lies of these heirs. These spoiled brats will reap the vengeance of anti-market and anti-business sentiment among Koreans. Aside from strict punishment for the crime of stock-price manipulation, we need the chaebol families to instill a proper sense of ethics in their children, before teaching them how to run the family business.
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