Corruption scandals involving presidents and top-flight business leaders are to South Korea what coq au vin is to France. Vote-rigging allegations drove Syngman Rhee (president from 1948 to 1960) into exile in Hawaii; after they left office, both Chun Doo-Hwan (1980-88) and Roh Tae-Woo (1988-93) were tried and found guilty of mutiny, treason, and bribe-taking; Kim Young-Sam (1993-98) wasn’t jailed for corruption, but his son was; Roh Moo-Hyun (2003-08) was impeached and later committed suicide amidst bribery allegations. And that’s just a sampling.
Now, as we saw yesterday, it’s President Park Geun-hye’s turn to face the music. Choi Soon-sil, her friend of forty years, has already been taken into custody for a scheme, in which both women were involved, to squeeze money out of the huge – and hugely corrupt – conglomerates called chaebols that are at the heart of the country’s economy and that invariably play a big role in every major South Korean financial scandal.
In July of last year, according to the charges, Park met individually with the heads of the seven largest chaebols and demanded that they fork over millions to two Choi-run institutions, the Mir Foundartion and the K-Sports Foundation. Park refuses to quit over this affair, but national outrage is mounting steadily, and opposition parties are on track to impeach her. Something’s got to give, and soon.
Naturally, the whole ugly mess has also plunged the chaebols – for what feels like the hundredth time – into yet another calamity of their own making. For them, this crisis comes at an inopportune time. They’ve already endured years of weak domestic sales and low export levels. Now, thanks to the current scandal, the possibility of serious legal consequences looms – and something close to chaos reigns. “Normally,” one leading business figure told the Korea Times, “companies have an idea about what their business plans will be like around this time of the year. But as far as I know, many haven’t even begun drawing up plans yet due to increasing uncertainties.”
One after another, the superstars of South Korean business are being called on the carpet. On the weekend of November 12-13, prosecutors interrogated Chung Mong-koo, chair of Hyundai Motor Group, Lotte Group chairman Shin Dong-bin, and Lee Jae-yong, vice chair of Samsung (and next in line to run the whole shop) about their firms’ irregular money transfers to Choi’s foundations. Two days later, as part of a probe of a suspicious payment made by Samsung to a company owned by Choi and her daughter, hard drives and financial records were confiscated in a raid on the offices of Samsung’s advertising unit, Cheil Worldwide. It now appears that Samsung (which makes up a whopping 17% of the South Korean economy) donated a total of over $15 million to Choi’s foundations, in addition to which it reportedly offered no less than $3.1 million to pay for Choi’s daughter’s equestrian training in Germany. Yes, you read that right: $3.1 million for one person’s equestrian training.
This is, as it happens, precisely the kind of royal extravagance that has turned so many South Koreans against the self-indulgent excesses of their political and corporate elite. More on that tomorrow.