Amid growing uncertainties across the business community ahead of the 21st presidential election, te..

Concerns are growing that they are directly exposed to political risks as the possibility of management change or governance reform is discussed depending on the tendency of the next regime.

According to the business community on the 30th, KT President Kim Young-seop’s term is set for March next year, but since he has been embroiled in controversy over the CEO appointment process every time the administration changes, concerns are rising that CEO changes or governance structures could be carried out depending on the results of the presidential election.

Analysts say that KT has been privatized in appearance, but is not free from political influence in that it is still under the influence of the government as major shareholders are dispersed. In particular, some presidential candidates have promised to relocate private companies’ headquarters without hesitation, causing controversy over the independence of management if major stakes are widely dispersed like these companies.

In particular, criticism has continued to be raised over the fact that many ruling party and government officials are on the board of directors in each administration.

The current board of directors of KT is no different. KT’s board of directors has a large number of government officials, raising questions about the independence of the board. In fact, there are repeated cases in which political figures participate as outside directors, and there are cases where they are representatives of some affiliates. This has been pointed out as a structural problem that hinders the autonomous management of companies.

Since taking office as KT’s CEO in August 2023, President Kim has been evaluated by the market through the reorganization of insolvent businesses at home and abroad that are not related to core businesses. In particular, KT’s stock price has steadily risen since taking office.

It has made various achievements such as quickly cleaning up its sprawling non-mainstream business, promoting the transition of artificial intelligence (AI) to digital platform companies, and collaborating with Microsoft (MS). In the past, CEOs have organized overseas businesses such as Africa and Rwanda, and among overseas businesses such as Thailand and Vietnam, businesses that are not related to KT’s business have been organized and reorganized into related businesses such as AI.

A business official said, “The structure in which the CEO appointment issue rises whenever the government changes is a serious obstacle to the establishment of a company’s long-term strategy,” adding, “It will be difficult to be free from political risks without improving governance and securing board independence.”

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It is evaluated that POSCO Group is also not free from political risks. Although it has established a privatization structure since the transition to a holding company in 2022, controversy has been repeated that political influence has played a role in the process of appointing the chairman every time the regime changes.

“Posco is a representative example of not being free from controversy over political influence even after privatization,” a business official said. “It is independent in terms of governance, but government and political figures are often in the background.”

The same goes for KT&G. Concerns have persisted that political interests can directly affect corporate management. In fact, conflicts between internal strife over the appointment of CEOs and shareholders ahead of the general shareholders’ meeting have been repeated over the past few years, and management disputes have even intensified. Although KT&G is pursuing business diversification, especially in the non-smoking sector, political risks are more prominent in that it is in a position to walk a tightrope between short-term profitability and government policy.

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The business community points to the opacity of governance and lack of board independence as common problems for these companies. As long as public funds such as the National Pension Service are major shareholders, it is pointed out that corporate autonomy and sustainability will be threatened if the government does not improve the structure in which management change leads to a “practice”.

A business official said, “The reality that the CEO’s position is shaken whenever the regime changes, and corporate management depends on the political schedule is a serious obstacle to national competitiveness. We need to respect private governance and move toward strengthening the independence of the board of directors systematically.”