State prosecutors in Seoul are investigating charges of bribery and improper stock transfers at Hyundai Motor Co. and affiliate Kia Motors Corp., South Korea's biggest auto companies.
Three executives have been detained, and the crisis has reached top management. Hyundai Chairman Chung Mong Koo was recalled from a hasty trip to the United States by prosecutors. Kia President Chung Eui Sun was slapped with an exit ban, pending investigations into their roles in the alleged wrongdoings. Eui Sun is the son of Mong Koo.
Kia's April 26 groundbreaking for its Georgia plant has been postponed; the groundbreaking for a Czech plant, scheduled for May 17, may suffer the same fate.
Such delays are awkward, but the group's image has been battered and is a more worrisome issue, analysts say. Could Chairman Chung, widely credited with Hyundai's and Kia's excellent performance in recent years, be forced out?
Probably not, given the importance Koreans place on their economy and given that regulatory attacks on companies are par for the course in Korea.