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Shinsegae Group's heir-apparent Chung Yong-jin
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Group’s move renews debate on conglomerates' unorthodox power transfers
Shinsegae Group has recently announced that it will pay inheritance taxes in transferring the group's managerial control to heir-apparent Chung Yong-jin. The amount of taxes, set to reach more than 1 trillion won (1 billion USD), was called "surprising" by the group. Although details surrounding the announcement have yet to be unveiled, sources say that it was the group's chairwoman, Lee Myung-hee, who made the decision late last year. Others speculated that Shinseage had no choice but to make the move as Samsung and Hyundai, the nation's No. 1 and No. 2 conglomerates, are currently embroiled in controversy over their alleged unorthodox transfer of managerial power from father to son. As if on cue, following the Sinsaegae announcement (correct?--Ed), a high-ranking Samsung official said that Lee Kun-hee's son, Lee Jay-yong, will pay over 1 trillion won in inheritance taxes, a glimpse of changes currently running through South Korean business society. Shinsaegae’s announcement, made before any legal threat was leveled, represents a major shift in the business practices of large Korean conglomerates.Despite the shifting trend, some media and business organizations such as the Federation of Korean Industries continue to argue that if inheritance taxes are paid, there will be nothing left to pass on. Observers see this view as representative of the anachronistic mindset that a company is a privately owned asset, rather than an entity endowed by its shareholders. It would also be shortsighted to argue that the government has to lower inheritance tax rates to lessen financial burden on companies, these obesrvers say. Inheritance taxes are not just applicable to conglomerates but also to all people living in South Korea, they say, therefore it would be inappropriate to revise the tax rates only for a small group of business operators.
