The Dirty Dozen #8: Hyundai

Hyundai Group Chairwoman Hyun Jeong-eun (left) with North Korean dictator Kim Jeong-il in Nov 2005.

Hyundai, the South Korean conglomerate, has extensive business ties to a number of state-sponsors of terrorism, but has come under closest scrutiny for its role in North Korea.  Numerous published reports indicate that the company engaged in secret, illegal funds transfers to Pyongyang totaling as much as $500 million in the immediate run-up to an important 2000 summit between the North and South Korean governments.  It has also been alleged that the South Korean government was aware and supportive of the fund transfers as a means of effectively bribing North Korean dictator Kim Jong-il to participate and, thereby, to advance the "Sunshine Policy" of his South Korean counterpart, then-President Kim daeJong.

Hyundai’s deplorable indifference to the potentially dangerous consequences of its actions in the North was evident in remarks attributed to a senior company official, Kim Yoon Kyu.  He was quoted as saying: "We made clear and told them [the North Koreans] half-jokingly not to use the money in making missiles."  He added, "I asked them where they used the money from us.  They said they can’t tell us the details, but they sure didn’t use the money to make missiles."1

Hyundai is likewise active in Iran, where the company and its subsidiaries are increasing their ties to the country and its despotic regime.  Among those projects are the supply of manufacturing components, energy-related construction and development work and ship repair. In 2005, Hyundai Heavy Industries and Daewoo signed a $1 billion joint deal to build oil tankers in direct violation of the 1996 Iran-Libya Sanctions Act.2 Hyundai Engineering and Construction also made a deal in 2005 to build a gas processing plant worth $1.2 billion.3 Hyundai’s automotive wing in 2004 started a production line in the terror-sponsoring state of Iran. In the multi-million dollar deal with Iranian firm Kerman Motor, Hyundai hopes the Iranian partner will assemble and sell 100,000 Hyundai-model cars per year.4

Hyundai’s activities place it on the "Dirty Dozen" list for the following reasons:

• Direct Money Transfer: The overarching objective of U.S. sanctions is to deprive terrorist-sponsoring states and proliferators of the type of funds required to build expensive weapons of mass destruction programs and sponsor terrorism.  Yet, the company has provided between $200 and $500 million in undisciplined, non-transparent cash transfers to the North Korean government.  The use to which one of the planet’s most threatening regimes has put these funds is unknown.
• Scope: Hyundai and its subsidiaries are some of the most active public companies in terrorist-sponsoring states.  Its $2.6 billion in projects in Iran, for example, help enable the type of economic growth that allows the country to sponsor terrorism with impunity.
• GeopoliticalMotives: Given Hyundai’s track record in terrorist-sponsoring states, it is clear that a country’s willingness to support terrorism currently plays no role in the corporation’s investment strategy and decision-making.  American investors may not feel the same way, however, and need to be aware that a company in which they hold shares is enabling a South Korean government policy that directly contradicts U.S. attempts to defeat terrorism. 
• Moral and Political Cover:  When leading global companies such as Hyundai partner with terrorist-sponsoring states, it sends a clear message to these governments: Sponsoring terrorism is not a concern as long as there are corporate profits to be made.  This message undermines U.S. sanctions and international diplomatic efforts.

1. Washington Post, February 2, 2003.

2. Bloomberg News Service 5/9/05. Retrieved December 4, 2006 from IranFocus.com <https://www.iranfocus.com/modules/news/article.php?storyid=2042>.

3. "Hyundai in Asalouyeh Gas Plant Contract." July 4, 2005. <https://www.iran-daily.com/1384/2316/html/74142.>

4. "Hyundai Production Lines Operational." Iran Daily, 9/18/04. <https://www.irandaily.ir/1383/2091/html/economy.htm>.