Hyundai Says ‘Harassment’ Could Kill It : Politics: The South Korean government’s actions have occurred since the firm’s founder launched a rival party.

The founder of the giant Hyundai Group has warned that the conglomerate could collapse this year if the government did not halt what he said was harassment of the company.

Chung Ju-yung, now leader of the opposition National Unification Party, maintains that tax investigations and credit squeezes on the company he ran for more than 40 years constitute political harassment.

“The more the people’s expectations for the UNP rise, the more (the government) will suppress Hyundai,” Chung told a newspaper editors meeting Friday.

“And then Hyundai would collapse, perhaps before the presidential election,” the retired tycoon was quoted by a UNP spokesman as saying.

Hyundai, South Korea’s second-largest conglomerate in terms of sales, is made up of 43 subsidiaries engaged in a wide range of light and heavy industries and service activities, including securities and retail business.

In the latest government action, tax authorities this month charged Hyundai Merchant Marine Co. with evading millions of dollars in taxes from 1987 to 1991.

The shipping firm was slapped with tax penalties of $34.7 million, and several company executives were indicted for complicity.

Officials of President Roh Tae-woo’s administration deny that the actions have been politically motivated. The government has no plan to bury Hyundai, they say.

All investigations have been carried out strictly within the letter of the law, they said.

A spokeswoman for Hyundai Motor America Inc., the U.S. import and distribution arm of Hyundai’s automotive unit, said Chung’s comments have not touched off any alarms at the company’s Fountain Valley headquarters.

“We have not received any word of an imminent collapse,” she said.

Area auto industry consultants who have worked with Hyundai over the years said Chung’s comments have to be considered in context.

“We Americans are unaccustomed to the high-pitched emotional tone common to Korean politics and business,” said David Hillburn, a Los Angeles consultant who helped Hyundai launch its U.S. auto business in 1986.

“It probably does make it difficult for the American staff to plan for the future when their decisions can be altered for political reasons, but Hyundai’s American management in Fountain Valley is well experienced in drastic upheavals because of the recent labor unrest in Korea and the company’s rapid changes in product plans. So they can cope if the need arises.”

George Peterson, president of the AutoPacific consulting firm in Santa Ana, said a warning about a possible Hyundai collapse “sounds like lots of political hyperbole and posturing . . . I think collapse is too black and white a term. He might have meant that Hyundai would have to undergo a lot of restructuring.”

Chung, a long-time government critic, announced his retirement from business in January to form his own party to campaign against Roh’s government.

The crusty 76-year-old has hinted that he will run for president in this year’s election.

A series of disputes between the government and Hyundai have flared since late last year after the tax office hit Chung, his family and 10 Hyundai subsidiaries with $174 million in penalties for tax evasion.

Earlier this year, South Korea’s banking regulator announced that Hyundai’s electronics arm would be sanctioned for diverting borrowed funds to Chung and the UNP.

Hyundai’s exports of $1.98 billion in the first quarter accounted for 11.64% of South Korea’s total exports, a group spokesman said.