'Fishy deal' between PR agency and former bank CEO

'Fishy deal' between PR agency and former bank CEO. August. 26, 2016 07:15. by 권순활논설위원 shkwon@donga.com.

In 2008, Min Yoo-sung, the then-CEO of the government-run Korea Development Bank (KDB), closed a service contract worth 150 million won (134,348 U.S. dollars) with the public relations agency News Communications (Newscom). The contract came as an unprecedented case for KDB, whose in-house PR division was already operating actively. “Despite fierce oppositions from employees, Min pushed ahead the contract, which was quite strange at that time,” an official of KDB said. After leaving KDB in 2011, Min established a private equity investment firm, and again consigned the PR activities to Newscom.

Another “fishy PR contract” was signed between 2009 and 2011 when the KDB-owned Daewoo Shipbuilding & Marine Engineering was led by CEO Nam Sang-tae. An eye-opening 2 billion won (1.79 million dollars) contract was indeed extravagant enough for a PR agency. During the recent investigation, prosecutors discovered a statement from Nam that the bid was offered as a preferential treatment to lobby for his consecutive terms through Newscom CEO Park Soo-hwan who built strong rapport with Min. On the materials distributed to domestic and foreign clients, Newscom included the name and contact information of Min. It was known that Park associated with Min when the former KDB CEO was working at a foreign financial company.

Established in 1997, Newscom is labeled as a “mutant” in the Korean PR industry. Unlike other agencies, Newscom often intervened in management rights conflicts while taking service fees. For instance, Newscom served as the media outlet for the U.S. hedge fund Elliott Management Corp., which attacked Samsung when Samsung C&T and Cheil Industries merged. Newscom was also the cat’s paw for existing managements engaged in management rights battle between Hyosung Group and Dong-A Pharmaceutical.

Suspicions aroused by Park and Min during the corruption investigations on the “too-big-to-fail” Daewoo engineering also stirred up the press. On its English website, Newscom proudly introduced itself as “an agency maintaining ‘strong ties’ with all journalists ranging from junior reporters to chief editors.” Word on the streets has it that Park leveraged his acquaintance with some media executives as a sales pitch. If some journalists did directly or indirectly give a hand to selfish fests of Park and Min, journalists will inevitably be criticized for forgetting their duty.