Asia's bosses quake before Korean Gekko

FOR MORE than a year now, the various official spokesmen for global financial sanity have been bitching and moaning about the need for Asian countries to change the way they do business. But the two most important troubled Asian economies - Japan and Korea - have been changing very slowly, or not at all. No empty CEO heads have rolled, no assets have been stripped, no stupid corporations have been raided and reformed.

This is, of course, only to be expected. For all sorts of reasons not worth going into, Asian governments were able to generate economic growth for decades without ceding control to the private sector. This was Asia's miracle. It was also Asia's curse. Because Japan and Korea - and to a lesser extent Thailand, Malaysia and Indonesia - were able to prosper with relatively unfree markets, they enshrined in their economic life a social contract more suited to feudalism than capitalism. One part of the contract, for instance, is that a job with a big corporation was a job for life. (No downsizing!) Another part is that the corporate managers who use capital are beholden less to the owners of capital than to government bureaucrats. (No profits for you!)

You might think that the crash destroyed the old Asian social contract. But social contracts are difficult to change - they are the assumptions people are dealt at birth. Upon them people erect their precious identities. The changes that need to occur in Asia are ultimately not financial but psychological. Some meaningful chunk of the developed world requires not a bailout package but a 12-step programme.

This sort of deep change never occurs without struggle and pain. The struggle will most likely pit the people who have the most to lose from change - the current management of large Asian companies - against the people who have the most to gain from forcing change upon them, the owners of capital. The struggle, in short, looks a lot like the struggle that defined financial America in the 1980s. Indeed, much of corporate Asia looks a lot like the inefficient company to which Gordon Gekko delivered his greed-is-good sermon.

But the Asian version of this financial plot has an interesting twist. In Asia, Gordon Gekko is the good guy. And he wears no hair gel. And he is Korean. His name is Hasang Jang. Over the past year the Wharton-trained professor of finance at Korea University has taken to harassing the management of large Korean corporations. In the process, Jang has discovered an important truth: in Korea and Japan, it is impossible to separate politics from finance. "In a corporate state," he says, "all the power is with the corporations." Jang's ambition is to break corporate Korea's power hold. And he aims to do this by insisting that corporations make more money.

There was a time when social radicals decried the profit-seeking instincts in companies; now, at least in Korea, they champion them. Gekko-like, Jang terrorises Korean corporate management at shareholder meetings; he humiliates them in the press; he sues them for negligence. He himself does not profit from his activities, but the shareholders of the companies he harasses do.

Jang's current victims - SK Telecom, Korea First Bank and Samsung Electronics - all are now bent double, clutching their respective groins. The first two have agreed to elect outside directors from a list provided by Jang. The third, Samsung, has agreed, after Jang extended its shareholder meeting to a world record of 13 hours, to explain its internal workings to the outside world.

One measure of Jang's effectiveness is that he is followed by men in suits. Another is that he receives death threats from strangers. A third is that he receives invitations to dinner from the nervous heads of large corporations.

Jang is busy patching together a coalition of people whose interests coincide with his own. (That means you! He can be e-mailed at jangya@chollian.net) Last week he visited New York and San Francisco to meet with large US investors. Foreign investors control about 20 per cent of outstanding Korean equities. Some of these investors - Tiger Management, Scudder, Stevens & Clark - have figured out that if they give Jang the right to vote their shares, Jang may terrify Korean managers into changing their lives. Capitalists of Asia unite! You have nothing to lose but your shirts.

q Michael Lewis is the author of `Liar's Poker', the best-selling account of Wall Street in the Eighties.