LS Group, the nation’s largest cable manufacturer, said that it will shut down its affiliate, JS Cable, to take responsibility for last year’s nuclear reactor corruption scandal

January 12, 2014 Leave a comment

LS Group to shutter JS Cable unit

Jan 07,2014

LS Group, the nation’s largest cable manufacturer, yesterday said that it will shut down its affiliate, JS Cable, to take responsibility for last year’s nuclear reactor corruption scandal.JS Cable, which LS Group acquired in 2005, was at the center of a nuclear power shutdown that led to nationwide power shortages last year. The company was accused of fabricating test results and supplying poor quality cables. It is facing lawsuits from the Korea Hydro and Nuclear Power Corporation.
JS Cable and another of the group’s affiliates, LS Cable, were among eight businesses fined by the Fair Trade Commission last year for fixing prices of cables supplied to nuclear reactors.
LS Group, the nation’s 16th-largest conglomerate, said that the decision is part of its plan to take moral and social responsibility for the scandal. JS Cable has been one of the group’s solid affiliates, raising sales of 582 billion won ($546 million) and an operating profit of 13.1 billion won in 2012.
“We acquired JS Cable, which has specialty in vessel and offshore special cables, to become an integrated cable company in 2005, but the nuclear power business faced a quality problem,” the company said in a release. “By closing JS Cable’s businesses, we ask forgiveness to people for our illegal action and hope to clear concerns about nuclear power.”
LS Group, which holds a 69.9 percent stake in JS Cable, said that it will buy the rest of the shares for 6,200 won per share before delisting the company from the stock market in a bid to prevent damage to minority shareholders. The stock price of JS Cable was 5,300 won per share as of yesterday.
Even though JS Cable will close, LS Group said that it will provide employment for 300 JS Cable workers, while carrying out payments and supplies for existing contracts.
After the shutdown of JS Cable, LS Group also said that it will donate 100 billion won for research and development and safety technology development to help Korea’s nuclear power plant business. The conglomerate said that it is talking with related organizations and experts to discuss when and how the fund should be used.
LS Group said that it formed a quality safety committee and recruited third-party experts to take special management training and conduct inspections to enhance its products’ safety and credibility.
Industry insiders said that the measure is the commitment that LS Group Chairman Koo Ja-yeol announced in his New Year message. Koo emphasized law-abiding management, saying that the group will not tolerate any illegal or unfair actions. LS Group said that it has created a law-abiding index and has applied it to its employee evaluation program.
“Everyone knows that one person’s or division’s illegal action can determine the fate of the company,” the company said in a release. “We will learn from this incident and will never commit the same action again.”
BY JOO KYUNG-DON [kjoo@joongang.co.kr]

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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