Bloomberg News

Software Mogul Challenges S. Korean Politics as Vote Looms

August 24, 2012

After trailing in polls for months, South Korea’s opposition is being tempted by popular support for a political neophyte as a decision looms on its candidate for president in December elections. The maverick’s attraction as an outsider may also be his biggest vulnerability.

Ahn Cheol Soo, founder of South Korea’s biggest antivirus software maker, for a time overtook ruling-party candidate Park Geun Hye in polls after a single television appearance on July 23. The 50-year-old, who has yet to declare his candidacy, is riding a wave of dissatisfaction over slowing growth, a widening income gap and failure to stoke domestic demand.

Picking Ahn would set up a battle of political experience - - Park, 60, is a veteran legislator and daughter of the nation’s longest-serving dictator -- against the type of independent appeal that Ross Perot offered in the U.S. two decades ago to voters disenchanted with established candidates. Ahn’s challenge would be learning how to convince lawmakers, as he pushes a program that features dismantling industrial groups’ cross- shareholdings and economic engagement with the North.

“Ahn has so far done the opposite of what a politician would do and has approval ratings politicians dream of,” said Jaung Hoon, a professor at Chung Ang University in Seoul who has analyzed the nation’s politics for more than two decades and written a book on its experience with democracy. “His lack of experience in the political scene is his greatest appeal but eventually it may be his downfall. Even if he surrounds himself with veteran politicians and bureaucrats, he will have to direct them and it’s unclear that he would know how.”

Anti-Establishment

A one-time medical doctor, Ahn says his position as an outsider is an advantage, distancing him from the “outdated” practices of the nation’s dominant parties. Perot tried a similar strategy in the U.S. in 1992, surging in polls at a time of legislative gridlock, before he eventually finished third, behind George H.W. Bush and the winner, Bill Clinton.

Like Perot, Ahn built his fortune in technology, founding Ahnlab Inc. (053800) in 1995. He currently has a 29 percent stake in the business, worth 365 billion won ($320 million), according to Yu Min Yeong, Ahn’s personal spokesman.

President Lee Myung Bak, 70, ends his five-year term in February and is constitutionally barred from seeking re-election. A former chief executive officer of Hyundai Engineering & Construction Co. (000720), Lee has seen support slide since his 2007 victory after failure to deliver on a campaign pledge to boost wage growth and an aborted effort to enact a second round of tax cuts in three years for the chaebol, as the nation’s industrial groups are known.

Weakest Record

Lee bequeaths an aging society with its lowest population growth since the Korean War, and the weakest average economic expansion during a presidential term since the start of an enduring democracy in the 1980s, International Monetary Fund data show. The nation’s richest 20 percent earned 7.86 times more than those in the bottom 20 percent last year, the biggest margin since Statistics Korea began publishing the data in 2006.

Elections in the past year have underscored increasing public angst, with voters in April producing a narrowly divided legislature and in October opting for an independent who was backed by Ahn for mayor of Seoul, the capital.

Now, Ahn himself might run for office. The Ahnlab chairman released a book last month, “Ahn Cheol Soo’s Thoughts,” laying out his economic and national-security agenda. He declined a request for an interview.

Nomination Contest

“It’s pretty clear that Ahn intends to run for president,” Lee Hae Chan, head of the main opposition Democratic United Party, told reporters July 23. The party is scheduled to pick its candidate by Sept. 23. Its current main declared candidate is Moon Jae In, 59, a human-rights lawyer and one-time chief of staff to former President Roh Moo Hyun.

Moon, jailed in 1975 for joining street protests against the rule of Park’s father, is polling third behind Park and Ahn, giving the opposition incentive to consider any declaration of interest by Ahn. An Aug. 13-17 poll by Seoul-based Realmeter put support for Ahn at 31 percent, trailing Park’s 35.9 percent. Moon had 11.3 percent in the survey of 3,000 people, which had a margin of error of plus or minus 1.8 percentage points.

Ahn called in his book for a restoration of “welfare, justice and peace,” and advocated weakening the grip of the chaebol on the nation’s economy. Along with banning conglomerates’ cross-shareholding, Ahn would limit their investments in subsidiaries. While family-run companies such as Samsung Electronics Co. (005930), LG Group and Hyundai Motor Co. (005380) have been at the core of South Korea’s economic development, Ahn says they stifle small and medium-sized enterprises.

Staying Independent

The entrepreneur honed his ideas on industry through building Ahnlab, which he started seven years after writing his first anti-virus program. He garnered public goodwill by offering the software for free to individual users and by rejecting multimillion dollar offers to buy him out from overseas rivals Symantec Corp. (SYMC:US), Trend Micro Inc. (TMICY:US) and McAfee Inc.

A native of the southern port city of Busan, Ahn’s stance on North Korea is more moderate than the outgoing president’s. He supports expanding a joint economic zone in Gaeseong, north of the border, and resuming tours to the North’s Mount Geumgang.

Ahn has advocated tackling North Korea’s nuclear weapons program by restarting six-party talks that were suspended in 2008. Kim Jong Un, the third in a dynasty of communist dictators in the North after succeeding his late father in December, has so far failed to engage with the process.

Experience Question

“My lack of political experience is definitely a weakness,” Ahn wrote in his book, which sold more than 120,000 copies within two days, according to publisher Kim Young Sa. “At the same time, I think it’s actually a good thing that I have less of the ’bad experiences’ in an era where we need to part from a worn-out system.”

Ahn would still need to work with that system to govern should he become the sixth president since free elections were held in 1987. The next president is scheduled to take office in February, and will need to get parliamentary approval for his or her pick for prime minister.

The 300-seat National Assembly is narrowly split, with 128 seats held by the Democratic United Party and 148 by the ruling party after Park led it to a come-from-behind victory in April.

“The new president will need to showcase political finesse to get legislation passed through a parliament whose majority is so narrowly held between the two main parties,” said Jeong Han Wool, executive director of the Center for Public Opinion Research at East Asia Institute in Seoul. “It’s hard to believe someone who has absolutely no experience in parliament and government will know how to bring the two together.”

Political Savvy

Park, who would be the nation’s first female leader, was acting first lady after her mother was killed in 1974 in a bungled North Korean assassination attempt against her father, late President Park Chung Hee. She showed her political savvy in the run-up to the April election, distancing herself from the current administration’s policies to avert defeat at the polls.

Park has called for policy changes to address youth unemployment and the strains that an aging society will place on welfare and pensions. She told senior party members on Aug. 21 that tax policies need a complete overhaul to be able to fund expanded welfare for the elderly and help those struggling with household debt, according to a statement on the party’s website.

“We can’t continue the current gap between the level of welfare the people want and how much people will have to pay in taxes to be able to afford it,” Park said in the statement. “We need to reset our priorities.”

Ahnlab Outperforms

Shares in Ahnlab, based in Seongnam, south of Seoul, have surged with each report speculating Ahn will run for president. The stock jumped 7.9 percent in Seoul today after local newspapers including the Hankook Ilbo reported that supporters of the opposition urged Ahn to join the party.

The stock price has more than tripled since the start of October, giving the company a market value of 1.3 trillion won. In the past 3 years, Ahnlab has risen more than sevenfold, compared with a 19 percent gain in the Kospi index.

At the same time, Ahn has reduced his involvement with the company over the years, resigning as chief executive officer in 2005 to pursue a degree at the University of Pennsylvania’s Wharton School of Business.

He sold 860,000 Ahnlab shares in February and donated the proceeds to his charity, the Ahn Cheol Soo Foundation. Ahn said at the time he would donate another 1 million shares in future. Ahn’s spokesman Yu declined to comment on the total value of the charity’s endowment.

‘Healing Camp’

Ahn is now dean of Seoul National University’s Graduate School of Convergence Science and Technology. About 50,000 students flocked to his 27-college, 100-day lecture tour last year, in which he gave advice on careers and life. His July 23 appearance on Seoul Broadcasting System’s late-night talk show “Healing Camp,” gained the program’s highest ratings.

“Other than Ahn, there’s simply no alternative to the government and Park at this stage for the voters,” said Oh Keon Ho, head of the Global Political Economy Institute, a privately funded think tank in Seoul. “The big doubt over Ahn is who he’ll partner with in executing his vision, and whether he can tactfully persuade all sorts of political factions.”

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


Coke's Big Fat Problem
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • SYMC
    (Symantec Corp)
    • $23.25 USD
    • -0.41
    • -1.76%
  • TMICY
    (Trend Micro Inc/Japan)
    • $35.35 USD
    • -0.38
    • -1.07%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus