Hyundai Chief’s About-Face Helps Auto Maker : South Korea: After losing a bitter political battle for nation’s presidency, Chung Ju Yung seems resigned to getting conglomerate back on track.

In December, Hyundai tycoon Chung Ju Yung called Kim Young Sam, his government party rival for the presidency of South Korea, “a birdbrained leader of crooks.”

After finishing a distant third in last month’s election with only 16% of the votes, Chung, 77, declared that it would have been a disaster for South Korea if he had won. He apologized for deriding Kim and praised the new president as a politician with a 40-year record of honesty.

The about-face, insiders say, was not voluntary. Instead, it marked Chung’s surrender in his unprecedented, yearlong revolt against a government whose favors had, over the years, helped him build a 170,000-employee conglomerate that accounts for 12% of Korea’s exports and 20% of its gross national product.

Agreement is widespread that the surrender ensured the survival of the Hyundai Group, spared South Korea’s economy a staggering blow and enabled Chung himself to once again exert his influence as Hyundai’s “honorary chairman.”

The government had sent a clear signal that it wanted an end to what one insider called “Chung’s attempted coup--with money instead of soldiers.” Officials did so by indicting the rags-to-riches, self-educated businessman on charges of illegally diverting $64 million from Hyundai Heavy Industries Corp. to finance his plunge into politics. If convicted, Chung could have been imprisoned for up to three years.

Although the case has not been officially dropped, prosecutors have made no move to bring Chung to trial since he resigned his seat in the National Assembly and effectively dismantled his party, which held 12% of the seats.

And even if they do, “the sentence won’t be very severe,” a source said, adding, “The mood of the country is that nobody feels we should take revenge.”

Still, Chung has not escaped paying a price for his rebellion. He was fined $180 million for evading inheritance taxes on the sale of stocks to his sons and relatives, and the group’s Hyundai Merchant Marine Co. unit has been assessed a $35-million penalty for tax evasion.

For a man who claims personal assets of nearly $4 billion, the financial losses appear manageable.

Although the firm was cut off from access to government funds for expansion during most of last year and its stock plummeted in value, the Hyundai Group has suffered no lasting financial damage, said Kim Do Kyong, an analyst with the Lucky-Gold Star Research Institute.

But the cost in intangibles appears greater. More than 100 Hyundai executives are still under indictment--in hiding away from their jobs. And the group’s “lobbying power,” one of its major assets, has been eliminated, said a credit rating analyst. “No government official will even go out for a drink with a Hyundai executive anymore,” he said. “How can Hyundai offer a bribe to anyone?”

Hyundai will get its turn in government contracts for major projects, but special favors are no longer in the cards. Stable growth is likely, but other conglomerates, the analyst added, will probably expand more than Hyundai.

Deflated prices of Hyundai company stocks that are listed on the Seoul stock exchange--only 11 of more than 50 companies--are now a good buy, he said, adding, “We are recommending them, although everybody still has a little hesitancy about Hyundai’s future.”

With more than 300 Hyundai executives detailed to work on Chung’s campaign, employee morale suffered, the analyst said. Car sales fell below expectations with salesmen out stumping for Chung, Kim Kil Young, a deputy general manager of Hyundai Motors, told the Korea Times.

Hyundai Heavy Industries, the conglomerate’s shipbuilding wing, scored spectacular gains in profits and paid more taxes than any other corporation in South Korea in 1992, according to the Office of National Tax Administration.

But other Hyundai companies listed among the nation’s Top 50, while showing respectable sales growth, did poorly in profits.

Earnings of Inchon Iron & Steel plummeted 41.7%, while profit declined 32.8% at Hyundai Motor Service Corp. and 12.6% at Hyundai Motors. The auto maker, which ranked as the No. 1 corporate taxpayer in 1991, fell to 94th in 1992.

Worst of all, according to analysts, Hyundai Group has been unable to make any long-term plans.

Already back at work reshuffling executives and presiding over Hyundai business conferences, Chung may be able to correct that. Chung told reporters that he intends to reorganize the group into “specialized, independently managed entities.” But few doubt that Chung will issue all the orders.

Unlike some other families that run rival conglomerates in Korea, “the Chung family acts in unison,” the analyst said.

Indeed, so tight is family discipline that Chung’s six sons and their wives obediently go to the patriarch’s home for breakfast at 5:30 a.m. every day that Chung is in Seoul. The wives cook downstairs, while the husbands plan strategy upstairs.

Hyundai executives, citing their own uncertainty about what lies ahead with Chung back again, declined several requests for interviews.