08/02 Back to the old ways
The party will also support lifting the limit on cross-affiliate investments, a long-standing wish of the business community, Mr. Kim said. Under the anti-monopoly and fair trade laws of Korea, the government imposes restrictions on a conglomerate’s cross-ownership, including a ceiling on investments equal to 25 percent of its net assets in affiliated firms.
Uri head courts business with promises of pardons, via Drambuie Man
This [cross-affiliate investment] is precisely one of the things that caused so much pain to chaebols in the late 90s, the demise of the Daewoo group, and the garage sale of many units of other groups. Beside the issue of control of large groups with only a few percent stake in one company, which is bad enough, it creates a shallow shell that may look good on paper – and only until you start scratching the glossy surface – but is a recipe for disaster. As we say in French, you’re just taking from Peter to give to Paul. It doesn’t bring anything to the individual companies, since the money is just running around. No injection of fresh capital, no “new blood”, no innovation. Zilch. This is just buttressing two shoddy houses by making them lean one onto the other. 1997 again anyone?
