‘Outsider’ to lead troubled CJ Group

2013-10-09 16:45

‘Outsider’ to lead troubled CJ Group

Yi Whan-woo
CJ Group’s sudden management reshuffle on Tuesday is drawing keen attention as the group has decided to appoint Lee Chae-wook as CEO of CJ Corp., the holding company of Korea’s food and entertainment giant CJ Group. The group officially said that the appointment was aimed at ensuring stability in management and speeding up the slowing down of overseas projects but the sudden move has spawned speculation that it was part of punishment against management.The appointment is considered unusual in two aspects. First, Lee is considered an outsider. He spent most of his professional career outside CJ and moved to the group in January this year. He is the first outsider to take the helm of the holding firm. Second, October is not a typical time of the year when the group reshuffles management.
Taking these into consideration, Group Chairman Lee Jay-hyun must have felt a great sense of urgency in filling the management vacuum.
The chairman, who was arrested in July on charges of dodging some 70 billion won ($61.4 million) in taxes and misappropriating 100 billion won in company funds, has been released from jail temporarily to undergo medical treatment since Aug. 20.
Given that several key posts were replaced in the reshuffle, it is evident that Lee believes the previous management did not perform well, particularly in overseas projects, and he needs a person with a wealth of experience both in management and overseas business.
Lee Chae-wook began his business career at Samsung Construction & Trade (C&T), a trading company of Samsung Group, from which the CJ Group spun off in 1993.
He worked as an executive at Samsung C&T’s overseas business division until 1989. Between May 2005 and January 2007, he worked as the chairman of General Electric (GE) Korea, the Seoul branch of the U.S. company GE.
Lee also served as the president and CEO of state-run Incheon International Airport Corp. between September 2008 and January this year. He has been serving as the vice chairman of the CJ Korea Express Corp.
“The reshuffle can be seen as our effort to ensure stability in our business management and to spur our international projects,” CJ Group said in a press release.
The country’s 14th largest conglomerate has been slow in overseas expansion since Lee Jae-hyun’s absence in its operation. For example, CJ CheilJedang’s projects to build factories in China and Vietnam have been delayed. The firm is the food business arm of the conglomerate.
“He is a professional in global business management and has more expertise in such fields than any other executive-level officers within in the group,” the company said in the statement.
It added the newly-appointed CEO of CJ Corp. has led CJ Korea Express Corporation successfully since it merged with CJ GLS, a home delivery affiliate of the group, in March.
In the meantime, CJ Group dismissed speculation it made the decision in order to punish its high-ranking officials for failing to prevent its chairman from being arrested.
“Please refrain from over-interpreting our decision,” the company said. “It’s true the firm is at risk in terms of business operations but a reshuffle was a part of our normal activities to restructure the group.”
It said Lee Chae-wook’s predecessor, Lee Kwan-hoon, will be given “appropriate treatment” for his contribution to the firm. The predecessor served as the CEO of CJ Corp. for the past two years and eight months, according to the group.
Seven of the 13 executive-level officers, including heads of business management, finance, and human resources divisions, were replaced in the Tuesday reshuffle.