By Oh Young-jin
Staff Reporter

SEOUL The Chin dynasty, the first consolidated empire that ruled much of present-day China proper, fell due to internal dispute.

The demise of the Romans sprawling federation resulted from the coziness they indulged in for hundreds of years, inducing a sense of complacency that their empire would last forever.

In both cases, there was more than what meets the eye about the cause of the downfalls failure to meet changing parameters.

Now, the sun seems to be setting on one of Korea? modern-day empires Hyundai Business Group.

According to its own statistics, Hyundai encompassed 83 affiliates ranging from door-to-door service to shipbuilding and automobile manufacturing as of the end of 1999.

Its combined annual sales amounted to 97 trillion won and assets to 90 trillion won against debts of 70 trillion won.

Hyundai is about to let go of its most profitable affiliates those related to automobile production and shipbuilding reducing Korea? largest business empire to a shadow of its former self. Its disintegration appears to be unstoppable and troubled.

Its demise, if it occurs as predicted, could be attributable to all of the factors that toppled the great ancient empires.

As happened in the transition of power from founder to son in the Chin era, Hyundai suffered a series of internal struggle among the sons of its 85-year-old founder Chung Ju-yung and his siblings for the throne.

Although it is disputable, the start of the internal dispute was the duel between Se-yung, Ju-yung? younger brother, and Mong-koo, the founder? eldest living son, for Hyundai Motor.

Mong-koo easily won the battle. But in retrospective, it was only the beginning of what was coming.

One thing led to another as Mong-koo waged a fierce battle with his younger brother Mong-hun. Mong-hun emerged as the winner, taking the title of group chairman for himself and relegating his elder brother as head of Hyundai Motor.

Both sides laid their claim to the throne, arguing that their aging father was on their respective side.

At one point, the Mong-koo camp staged a coup using his father? written order that he be reinstated as group chairman, but the elder Chung? order was later declared null and void for reasons Hyundai is reluctant to reveal even today.

The two camps fought tooth and nail, neglecting to pay attention to spreading discontentment among investors. The first hiccup was a liquidity crunch that befell its financial units.

Lee Ik-chi, Mong-hun? chief lieutenant and former head of Hyundai Securities, played a big role in stitching together a self-rescue package that comprised plans for Chung to put up his personal assets and invite foreign investment to conduct a major financial house cleaning. The promise has not been translated.

But Hyundai says that the U.S.-based American International Group (AIG) could throw in $1 billion but a closer look at the potential AIG deal reveals that it is just another desperate attempt to sell corporate assets at a fire-sale price. Proof is that W. Ross, a corporate raider whose reputation is "notorious" among market watchers, is a member of the AIG-led consortium.

With this, Hyundai Construction? trouble has come to the fore.

Some market watchers say that Hyundai? expansionist move is partially to blame, as Hyundai? holding firm is said to be behind Hyundai? inter-Korean business endeavor. Hyundai Construction is a major shareholder with a 25 percent stake in Hyundai Asan Corp., the group? spearhead for business in North Korea.

The riot that started on the fringe of the markets is spreading to the center.

Investors are no longer listening to what Hyundai says, believing that their collective calls for restructuring have fallen on deaf ears. Their wrath is boiling over, the stock markets being apt testimony. Smelling blood, creditors are pulling in their credits rather than allowing their rollover.

"Hyundai Construction is the seed of the Hyundai Group, created with the blood, sweat and tears of founder Chung," a Hyundai spokesman said. "Mong-hun, his heir, will do all he can irrespective of whether he will be able to save it or not in the end."

A Hyundai Construction official said, "We will never give up Hyundai Construction. Mong-hun has returned and things can change." Chung has been a virtually deadbeat son for a month, going on an overseas trip when Hyundai Construction narrowly escaped bankruptcy, leaving his octogenarian father in charge.

These remarks show the group? failure to adjust to a new, changing set of parameters fitting the New Economy, according to market watchers.

Some market watchers see that Hyundai is throwing good money after bad. Even if Hyundai poured in everything it had, it would be hard to save Hyundai Construction, as their theory goes.

"In the end, the creditors will conduct a capital decrease, a major debt for equity swap and hand the firm over to a special purpose vehicle," one market participant said. "Should it exhaust everything now, how will they deal with looming difficulty at Hyundai Electronics Industries, one quarter of whose 8 trillion won in debts will mature in the first quarter of next year?"



The writing on the wall is unmistakable. The investors riot is threatening the very seat of the Hyundai empire and the creditors hounding the blood of the men on and around the throne, but there appears no sign that a white knight is coming soon.

The inner circle members surrounding the throne seem to be indulging in the myth of "too big to fail" which they themselves helped to build.

But taken in a bigger context, empires rise and fall. Perhaps the same fate is finally happening to Hyundai Group.