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. Last Updated: 07/27/2016

South Korean Conglomerates Vow to Accelerate Reforms

SEOUL, South Korea -- The heads of South Korea's top five conglomerates pledged Wednesday to speed up restructuring by adopting advanced accounting methods and other measures.

They made the pledge at a meeting with President Kim Dae-jung, who has made reform of the debt-ridden conglomerates, or chaebol, one of his top economic priorities.

The owners of the five conglomerates f Hyundai, Daewoo, Samsung, LG and SK f agreed to limit cross-funding among affiliates, stop unfair financial transactions, increase the number of outside executive board members and tighten audit procedures.

The meeting came amid concern that financial woes faced by Daewoo may hurt South Korea's economy.

Last week, under pressure from creditors, Daewoo agreed to sell off all but six automobile-related subsidiaries to pay off 57 trillion won ($48 billion) in debt.

"I will try to minimize damage to the economy by strictly carrying out restructuring,'' Kim Woo-choong, chairman of Daewoo, said at the meeting, government officials said.

Kim also said he was ready to give up management control of Daewoo to help speed up restructuring of his ailing conglomerate, South Korea's second largest.

The meeting Wednesday also came as the Financial Supervisory Commission, the government's financial watchdog, reported significant progress in efforts by chaebol to improve their finances.

South Korea's family-controlled conglomerates thrived on cozy relations with past military-backed governments, overexpanding and overdiversifying during the boom years. When the economy slowed, sales failed to meet investment, alarming creditors.