Finally: street protests against chaebol corruption!

Moon Jae-in

On this site we’ve been reporting for some time on the lavish vows by South Korean President Moon Jae-in to reform the chaebols, those massive family-run conglomerates that have served as the foundation of that country’s economy since not long after the Korean War – and that have increasingly been viewed with disfavor by that country’s citizens because of their extraordinary levels of corruption, nepotism, and impunity, not to mention their power to choke potential competitors in the cradle.

We’ve introduced our readers to Kim Sang-jo, not exactly intimidating man who was supposedly delegated by Moon with the task of challenging chaebol corruption and who, laughably, calls himself the “chaebol sniper.” And we’ve discussed the chaebol shareholders who, after years of biting their tongues, are finally starting to rebel against the bizarre system whereby clans that own only a small percentage of their companies nonetheless rule them with an iron hand.

Kim Sang-jo

Now comes some encouraging news. On November 21, with the backing of the Korean Confederation of Trade Unions (KCTU), more than 150,000 South Korean workers walked out of factories at firms like Samsung and Hyundai in protest against the utter failure of Moon’s government to come across with the chaebol reforms he promised.

The KCTU did not mince words in describing the situation in South Korea. “There has not been any real progress in chaebol reform,” it said. The KCTU added: “We think our labour rights as well as corporate reform have actually worsened under the Moon administration.”

Park Geun-hye

The KCTU further noted that the chaebol kingpins Lee Jae-yong (Samsung) and Shin Dong-bin (Lotte) had recently been arrested, tried, and convicted of bribing former President Park Geun-hye (who left office in disgrace because of the scandal) only to be given suspended sentences. Such special treatment for chaebol top guns is a longstanding tradition in South Korean politics and jurisprudence, and one that is making the nation’s citizens increasingly restive.

Hence the worker walkout.

Lee Myung-bak

That November 21 protest, moreover, was only one part of a growing nationwide uprising against President Moon. Every weekend of late, South Koreans have poured into the streets of Seoul in huge numbers to express their rage over Moon’s failure to keep his pledges. Describing these demonstrations as “raucous,” the Financial Times noted that while President Park and another former president, Lee Myung-bak, have ended up behind bars for corruption, the chaebol masters who were involved in the same acts of corruption still seem to be above the law.

According to FT, the probability that a chaebol boss convicted of corruption will get a suspended sentence exceeds 70% – while the comparable rate among non-chaebol leaders is 40%. As for poor schlubs who are found guilty of “street crimes,” such as petty theft, only 20% of them can expect to have their sentences suspended, even though the scale of their crimes is, of course, outrageously trivial compared to the monstrous malfeasances routinely committed by chaebol royalty.

More nuttiness from the nut-rage clan

Cho Yang-ho

The chaebol circus continues. On October 15, Cho Yang-ho, chairman of the Hanjin Group, which owns South Korea’s flag carrier Korean Air, was indicted on charges of embezzling $17.5 million from his firm and of using a scam to chisel $136 million out of the state insurance agency. An additional charge of evading inheritance taxes to the tune of $54 million was dropped because the statute of limitations had already expired.

Obviously, these chaebol CEOs aren’t paid well enough. They can’t get by without stealing everything that isn’t nailed down.

Heather Cho

Cho’s name may be new to you. But it’s possible you’ve heard of the older of his two daughters, Cho Hyun-ah, who is known in the West as Heather Cho and who, not so long ago, was vice president of Korean Air. Okay, perhaps you don’t remember her name, but do the terms “nutgate” or “nut rage incident” ring a bell? On December 5, 2014, Heather (as we’ll call her to distinguish her from her dad) was a passenger on a Korean Air flight that was about to take off from JFK Airport when she ordered the plane back to the gate. Why? Because Heather, who at the time was still the airline’s VP, had been served macadamia nuts that were in a little bag instead of on a plate. This outrage, which was in accordance with airline procedure, let her to physically assault the chief of the plane’s cabin crew and to order him off the plane.

Hanjin headquarters, Seoul

At first this episode was covered up by Korean Air. Airline employees, including the cabin-crew chief and a flight attendant who’d also been abused by Heather, were ordered to stay mum about it. Records of the incident were deleted. Authorities who were aware of the plane’s unorthodox return to the gate kept quiet about it. For a while there, a perfect cover-up seemed to have been put in place. But the story came to light anyway because a handful of passengers went to the media.

Heather’s tantrum made headlines around the world. It was especially big news in South Korea, unsurprisingly, where her conduct only served to reinforce the prevailing narrative about the arrogance and privilege of the chaebol princes and princesses and the readiness of authorities to cover up for them. Under pressure, Heather gave up one – but not all – of her titles at Korean Air (an absurd “solution” that seems typical of the bizarro world of the chaebols) and spent three months behind bars for having obstructed airline safety. Because of Heather’s temper, Korean Air ticket sales plummeted – while sales of macadamia nuts boomed.

Emily Lee Cho

That’s not all: it later emerged that the previous year, Heather had attacked a flight attendant because she didn’t like the ramen noodles she was served. And earlier this year, Heather’s younger sister, Cho Hyun-min, a.k.a. Emily Lee Cho, not to be outdone by Heather, was questioned over charges that she’d assault an employee of an ad agency working for Korean Air. (At the time, Emily was head of the airline’s marketing and advertising.) Obviously the whole family could use some treatment for anger management. 

As noted, Cho Yang-ho was indicted on October 15. In November came news that Grace Holdings, the second-largest shareholder in Hanjin KAL, the holding firm that controls the Hanjin Group, was seeking to remove Cho from Hanjin’s board of directors. Moreover, there were indications that other shareholders might join forces with Grace.

In another country, this might not be such massive news. In South Korea, it’s an earthquake. To remove the head of a chaebol family from control of his empire is unheard of. Such a move would be nothing less than revolutionary. It will be absolutely fascinating to see how this pans out.

Chaebols: are the “ants” finally rebelling?

The South China Morning Post recently ran a fascinating piece by Geoffrey Cain and Max Kim. Its premise, as stated in the first sentence, was as follows: “The family-run conglomerates that power South Korea’s economy have long been above listening to individual shareholders – or ants. But as the scandals mount, and take down presidents, those ants are fighting back.”

Samsung headquarters, Seoul

We’ve written frequently at this site, of course, about those South Korean conglomerates – known as chaebols – that are notorious for their outsized power and corruption and for the perverse fact that the power is in the hands of families that own small percentages of these behemoths and not in the hands of shareholders.

Just as a certain 2016 presidential candidate called ordinary Americans who work hard and pay taxes “deplorables,” the people who actually inject their own cash into these companies – and are therefore, technically, their owners – are called “ants.”

Hyundai headquarters, Seoul

Cain and Kim noted a couple of the high-profile corruption trials and convictions that have taken place in the last year or so and that we’ve written about here. But they added this highly interesting point: “In fried chicken and beer joints, in coffee shops in Seoul’s financial district of Yeouido, and in mobile app chats where investors circulate industry gossip, individual shareholders – known as ‘ants’ in investment circles – are getting rowdy and putting up a fight.”

LG headquarters, Seoul

About time. To some of us, the passivity of chaebol shareholders has never made a great deal of sense. It can only be understood as a cultural thing, a sign of the near-reverence with which the chaebol families have long been regarded. After the Korean War, these families founded these companies, and these companies, in turn, raised South Korea up from an impoverished Third World land to an economic powerhouse. Hence the family patriarchs came to be viewed as virtual royalty.

Hanjin headquarters, Seoul

But no more. “Corporate shareholder meetings have stretched for more than a dozen hours,” wrote Cain and Kim, “as shareholders barrage CEOs with questions; others have stormed the microphone, only to be removed by security.” They quote one “ant’s” summing-up of the way South Koreans have been trained to think about these things: “Finance is like the written word of ancient times,” he said. “It is the privilege of the ruling class. It is the preserve of the elite.” Well, if these signs of revolt are portents of a new era, then that kind of old-fashioned deference to a handful of powerful clans may well be on the way out. Which, it has to be said, is a healthy sign for South Korean democracy.

Roger Waters, scam artist

 

Roger Waters

Every time we turn around, Roger Waters, the outspoken musician and sometime member of the band Pink Floyd, keeps proving to be worse than we thought he was. On this site, we’ve written at length about his self-righteous efforts to shame other performers into canceling gigs in Israel. In an open letter to Bon Jovi, for instance, he accused the fellow rocker of standing shoulder to shoulder with baby-burners and child killers and, hence, of committing “the greatest crime of all.” In another piece, Waters accused singer Robbie Williams of “showing a chilling indifference” to the welfare of Palestinian children, who, he claimed, are viewed by Israel as nothing more than “grass to be mowed.” In yet another missive, he told chanteuse Dionne Warwick that she was ignorant of Israeli history.

Robbie Williams

Waters has gotten some pushback. In a piece for the Times of Israel, filmmaker Mark Blacknell asked why, if Waters is so concerned about the Palestinians, he doesn’t criticize Arab governments for failing to welcome Palestinians into their countries. He further noted a poll in which seventy percent of Israeli Arabs said they’d rather remain Israelis than become citizens of a fully independent Palestine. Blacknell, who had made a documentary about the Israeli-Palestinian situation, pointed out that while Israelis consistently said they didn’t Arabs, Palestinians made it clear that they despised Israelis. If only the terrorist groups in the Levant dropped their plans to push the Jews into the sea, noted Blacknell, the problem of peace in the Holy Land would be solved. “What is presented to you as innocent victims struggling for freedom,” Blacknell told Waters, “is in reality uncompromising cultural intolerance at a level so antiquated that is difficult for many westerners to comprehend.”

“In Waters’ world,” commented Israeli writer Lilac Sigan, “there is no Hamas, and this terror organization doesn’t live by its sword, doesn’t swear to death and violence, and doesn’t rule the Gaza strip with primitive Shariya law.” As we’ve pointed out, this wasn’t exactly true: Waters knows all about Hamas – and proudly stood up for them in a 2012 U.N. speech. His Jew-hatred is real. He’s a chilling, reprehensible piece of work.

Steven Donziger

And here’s a new wrinkle. During the last few years the media have covered the multiparty effort, fronted by a New York attorney, Steven Donziger, to extort billions of dollars from Chevron. This flimflam, in which several people invested substantial sums in hopes of making millions, has come to be known as the “Chevron Shakedown.” The case is now closed; Donziger has been disbarred. But during the investigators’ mop-up, the names of some of the people who invested in Dongizer’s scheme came to light. One of them was Roger Waters.

Waters, as it happens, has publicly accused Chevron of “greed,” just as he’s charged Israel with child-killing. Consistently, as with his attacks on Israel, he acts as if he’s the voice of morality, occupying the high moral ground. But when you publicly accuse a company of greed even as you privately invest in a sleazy shakedown scheme aimed at fleecing that same firm, there’s nothing remotely high-minded about it. On the contrary, it’s duplicitous and sleazy, period. But knowing what we already knew about Roger Waters, we shouldn’t be surprised by his involvement in this sordid scam.

The chaebol suicides

Samsung headquarters, Seoul

Another week, another stroll down memory lane. Chaebol memory lane, to be specific. In recent weeks we’ve been recounting the stories of various top-level executives of these massive South Korean conglomerates – men who, as is their wont, have ended up in hot water, and often in courtrooms (and, sometimes, at least briefly in prison cells) because of their corruption.

To be sure, chaebol leaders who get caught with their hands in the till don’t always end up arrested or imprisoned or pardoned. The South Korean shame culture leads some of them to take their lives. You might wonder why, if the shame culture is a powerful enough psychological phenomenon to drive these people to suicide, it doesn’t keep them from bribing and embezzling and so on in the first place. But that question is perhaps beyond the scope of this blog.

Chung Mong-hun

Here are a few examples of high-level South Korean self-slaughter. On August 4, 2003, Chung Mong-hun, the chairman of Hyundai and the son of its founder, jumped to his death from his 12th-floor office window. As the New York Times put it, Hyundai was South Korea’s “economic ambassador to the Communist North”; Chung had played a key role in arranging an historic summit in June 2000 between Kim Jong Il and South Korean president Kim Dae Jung. Afterward, however, South Korean auditors looked into the behind-the-scenes dealings relating to the summit and found that Chung had illegally paid a massive bribe to Pyongyang. He was about to be arrested for this crime when he chose to take the leap from his office window.

Roh Moo-hyun

On May 23, 2009, Roh Moo-hyun, who had served as president of South Korea from 2003 to 2008, killed himself by jumping off a cliff near his home. He had been under investigation for accepting $6 million in bribes from the business sector during his presidency. He had already been interrogated, and his wife was scheduled for questioning by investigators on the day of his death. He had already said that he “was losing face and that he was disappointing his supporters”; in a suicide note, he wrote: “nothing is left in my life but to be a burden to others….Don’t be too sad. Aren’t life and death both a piece of nature? Don’t be sorry. Don’t blame anyone. It is fate.”

Lee In-won


Two years ago it was Lee In-won’s turn. Lee, the #2 man at the Lotte Group, which at the time was South Korea’s fifth largest conglomerate, when he was
found dead in August 2016 beside a walking and cycling path near Seoul; he had hanged himself from a tree with his necktie. Lee, age 69, had spent 43 years at Lotte, where he was the highest ranking official not belonging to the conglomerate’s ruling Shin family. His suicide took place two months after police – tipped off about crooked deals among Lotte subsidiaries that led to the formation of a slush fund – raided the firm’s offices in search of evidence of those crooked deals. At the time of Lee’s suicide, he was scheduled to be grilled by prosecutors about these irregularities.

Lotte has less of an international profile than other major chaebols such as Samsung and Hyundai because its wealth is derived not from high-tech products exported around the world but primarily from apartment buildings, hotels, malls, cinemas, fast-food restaurants, and other such busineses in South Korea. It has about 80 subsidiaries and over 300,000 employees. The New York Times reported that Lee “was one of the professional executives commonly known in South Korea as vassals, for their loyalty to the families that control the business empires. These executives rarely betray their bosses during corruption investigations.”

Ben & Jerry….& Linda Sarsour?

Jerry Greenfield, left, and Ben Cohen

Who doesn’t know about Ben & Jerry’s, the ice cream company founded in Burlington, Vermont – that’s right, Bernie Sanders country – in 1978? Who doesn’t know that Ben & Jerry’s is not just political – goodness knows that plenty of companies nowadays wear their politics on their sleeves – but in-your-face political, aggressively political, Vermont political?

The company was founded by two old hippies, Ben Cohen and Jerry Greenfield, who have given politically tinged names to their ice cream flavors for years. They’ve waded into the British-Irish conflict, the Israeli-Palestinian conflict, a struggle in Australia over dangers purported posed by government policies to the Great Barrier Reef. In 2016, they created a flavor in support of Bernie Sanders’s presidential campaign. That same year, both Ben and Jerry were arrested at protests in front of the U.S. Capitol. Earlier this year, they announced support for Afghan asylum seekers in Sweden.

Resist ice cream

Their latest treat is something called Pecan Resist. As in “We can resist.” It is meant to be part of “a campaign to lick injustice and champion those fighting to create a more just and equitable nation for us all.” Get it? You can lick injustice just like you lick an ice-cream cone. If it seems to you that Ben & Jerry have a somewhat overly simplistic idea of politics, and an inflated idea of the importance of ice cream, well, you’re not alone – and you’re way late to the game.

Then again, it could be argued that Pecan Resist – “chocolate ice cream with white and dark fudge chunks, pecans, walnuts, and fudge-covered almonds (formerly known as New York Super Fudge Chunk in a previous incarnation)” – is a step further than Ben & Jerry have ever gone before. In their view, they are defending their progressive values against Donald Trump, and celebrating “the activists who are continuing to resist oppression, harmful environmental practices and injustice.”

To this end, in connection with the launch of Pecan Resist, they’ve donated $25,000 to four “progressive community groups”: Color Of Change (which tackles racism), Honor The Earth (environmentalism), Neta (which is “led by people of color along the Texas-Mexico border”), and, last but not least, the Women’s March.

Ben, Jerry, and (in hijab) Sarsour, celebrating the kickoff of the new flavor

Fine, you may say. Let them spend their profits as they wish. But the launch of Pecan Resist involved something more than just handing out cash to lefty groups. At an event held the day after the massacre of Jews in a Pittsburgh synagogue, Ben & Jerry, who are themselves of Jewish background, held an event at which the most celebrated guest was Linda Sarsour, head of Women’s March.

We’ve written about Linda. Who hasn’t? She became famous on January 21, 2017, the day after President Trump’s inauguration. She gave a fiery speech at that day’s Women’s March on Washington. She always wears hijab. She’s friends with Louis Farrakhan. She loves sharia. She’s the face of the radical Islamic Society of North America. She has said that Trump won the presidency “on the backs of Muslims.” She has routinely dismissed the impact of 9/11 and other jihadist acts on their victims and has just as routinely complained that Muslims are the victims of Islamophobia. She has demonized Brigitte Gabriel and Ayaan Hirsi Ali for daring to fret about the Islamic subjugation of women. And she has constantly made clear her contempt for Jews.

But none of this bothered Ben & Jerry. Confronted with her history, they’ve said they were cool with Sarsour. Okay, that’s their choice. But should we be cool with Ben and Jerry’s?

Another chaebol tale

In what country do the heads of the top half dozen or so corporations get arrested for corruption, found guilty, sent to prison, and then pardoned more often than in South Korea? The answer must be: none.

Chey Tae-won

Case in point: Chey Tae-won, chairman of SK Group, one of the half dozen largest of South Korea’s chaebols, the family-run conglomerates that dominate that country’s economy and whose leaders are part of an intricate network of power that ties them inextricably to the people at the very highest levels of government. In 1988, as if to demonstrate this high-level intimacy, Chey, who was the nephew of SK’s founder, married Soh Yeong Roh, the daughter of South Korea’s then president, Roh Tae-woo. The wedding took place at the Blue House, Seoul’s answer to the White House.

Five years later, in 1993, Chey was found guilty in a California court of breaking U.S. money laundering laws and of “smurfing,” which means “breaking up deposits into smaller amounts to avoid reporting cash transactions of $10,000 or more as required by law.”

Roh Moo-hyun

That was just the start. Ten years later, on February 23, 2003, Chey was arrested in South Korea on charges of insider trading. The arrest came only days before the inauguration of President Roh Moo Hyun, who, like many other South Korean presidents before and after, had declared his intention to reform the chaebols – which, while being credited with turning South Korea from a Third World country to a leading economic powerhouse, are also cesspools of high-level corruption. Among the 2003 charges against Chey was that he had plotted to increase his ownership share in SK by nefarious means and thereby to solidify his control of the conglomerate, which at the time consisted of no fewer than 58 separate firms. That June, after prosecutors uncovered $1.3 billion in accounting irregularities, Chey was sentenced to three years in prison.

Soh Yeong Roh


Once a crook, always a crook. In January 2012, Chey was indicted for embezzling over $40 million, which he sunk into personal investments. A year later, having meanwhile resigned as chairman of SK Group (while remaining chairman of the conglomerate’s holding company, SK Holdings), he was found guilty and sentenced to four years in prison. “The ruling,”
reported Yahoo News, “comes as South Koreans demand a tougher stance on crimes committed by bosses of chaebol.” The Seoul court that sent him to jail described his case as an example of how chaebol bosses “treat company assets as personal property.”

Park Geun-hye

In any event, that “tougher stance” against the chaebols didn’t last long. It never does. President Park Geun-hye – who had passionately vowed to crack down on chaebol corruption, but who is now in prison herself for involvement in chaebol corruption – pardoned him in August 2015. In March of last year, prosecutors questioned Chey, who in the interim had resumed chairmanship of the SK Group, as part of their investigation into President Park.

“To many investors,” the Seoul Herald commented a couple of years ago, Chey “seems to embody what’s wrong with Korea’s chaebol-controlling families.” Well, South Koreans are very big on two things: family and continuity. It could be argued that Chey, by retaining the respect of his clan and hanging on to control of SK no matter how many terms he serves behind bars, embodies those values, too.

A chaebol tale

Recently, we’ve been spending a lot of time here covering the chaebols, those economy-driving but corruption-ridden conglomerates that pulled South Korea out of the Third World but are now keeping its economy from shifting into even higher gear. Regular readers of this site will know that the current government in Seoul claims to be making serious efforts to reform the chaebols – but that so far there has been more big talk on this front than productive action.

Daddy Chung

As part of our attempt to educate our readers about this topic, we thought it might be advisable to take a look at some highlights of chaebol history. Today we’ll be harkening back to 2006, when Chung Mong Koo, the head of Hyundai Motor, the second largest chaebol in South Korea and (at the time) the seventh-largest carmaker in the world, and son of the man who had founded it in 1947, was arrested on charges of embezzlement and other forms of corruption.

The sum he had purportedly stolen from Hyundai was no less than 100 billion won, or $106 million. He was also accused of breach of trust for supposedly having incurred over 300 billion won, or $318 billion, in damages to the conglomerate. Moreover, government investigators had apparently uncovered evidence of “slush funds, compliant corporate boards and questionable arrangements involving affiliates that were set up to help Mr. Chung turn over the conglomerate to his son, Chung Eui Sun.”

Sonny Chung

Chung was the most powerful businessman in the country to have been arrested in a long time, and if found guilty of all charges he faced a possible life sentence. Except, of course, that he didn’t really face any such thing. The story of Chung’s brush with the law – he was sixty-eight at the time – ended up falling into the usual South Korean pattern, which can be represented by the formula A-I-R. A: arrest. I: imprisonment. R: release. Sometimes there’s a trial, and sometimes even a sentencing; sometimes these guys are pardoned before a trial can even be arranged or before a sentence can be handed down.

Chung had a trial. In February 2007, he was sentenced to three years in jail. (By this time, interestingly enough, Hyundai was being identified as the world’s sixth-largest carmaker.) The prison term came as a surprise: prosecutors had asked for six months, and it had been expected that Chung would get a suspended sentence. Certainly Chung seemed to expect that. In court, he “appeared shaken after the verdict.” He was, however, allowed to go home, prepared his appeal, and keep running Hyundai.

Hyundai headquarters, Seoul

Sure enough, as it happened, Chung stayed home. In September 2007, a three-judge panel of the Seoul High Court suspended Chung’s three-year sentence. The court’s explanation for this suspension was surprisingly frank. Presiding Judge Lee Jae-hong said that he had struggled with the decision, and had “sought the views of various people, including other judges, prosecutors, lawyers, journalists and ‘even taxi drivers and restaurant employees.’” In the end, he claimed, national interest had won the day: Chung was simply too important to South Korea’s economy not to have to go to jail. “I am also a citizen of the Republic of Korea,” he told the courtroom. “I was unwilling to engage in a gamble that would put the nation’s economy at risk.”

In a way, it was a refreshing admission. There was not the slightest pretense that the South Korean judiciary offers anything resembling equal justice for the rich and poor. No, Lee’s statement amounted to a candid acknowledgment that in South Korea, the chaebols do indeed rule.

What the hell is wrong with the chaebols?

Samsung headquarters, Seoul

We’ve been writing a good deal lately about the chaebols, those immense, influential, and staggeringly corrupt family-run conglomerates (think Samsung, Hyundai, LG, and Daewoo) that have dominated the increasingly dynamic South Korean economy during the more than half century since the Korean War. In recent decades, one government after another has promised to tame them, but, as we’ve seen, their power has yet to be seriously diminished.

We’ve wondered: what is it about Korean culture and the Korean sensibility that made the chaebols possible in the first place? How have the same crooked families – who over the years have been caught giving and taking massive bribes and embezzling fortunes from their firms – been able to maintain absolute control of them from generation to generation?

Hyundai headquarters, Seoul

After all, in most cases, these families don’t even own anywhere near a majority of company stock. The clan that runs Samsung, for example, holds just over one percent of total shares in that firm; the family that holds the reins at Hyundai owns about one-thirtieth of it. Indeed, on average, the chaebol royal families own only about three percent of the conglomerates that they run with iron fists.

But that doesn’t matter. As South Korean observers have pointed out, there’s something in the Korean mentality, with its fixation on family, that makes it well-nigh impossible for most citizens to accept the idea that the shareholders in a firm are its actual owners; instead, they reflexively view the chaebol dynasties, however little stock in their own companies they may have in their portfolios, as the real owners.

LG headquarters, Seoul

Yes, the passing down of company management from one generation of a family to the next is a worldwide phenomenon. But family is an even bigger thing in South Korea than elsewhere. There are, as it happens, ancient religious roots – Confucian roots – to this way of thinking. It’s no exaggeration, in other words, to say that in Korea, the idea of family is swathed in a kind of reverence. Especially in a time of rapid transformation in social and cultural structures, family continuity is widely seen as providing needed continuity and even giving those structures a kind of legitimacy that they otherwise would lack. From one perspective, of course, this may be an admirable way of thinking. From another, however, it is a sensibility that can create all kinds of problems for a large twenty-first-century business operating on the international financial stage.

Daewoo headquarters, Seoul

For the fact is that the curious structure of the chaebols renders shareholders all but powerless. Their investments are at the mercy of top executives who have inherited their positions and who may or may not know what they’re doing in those jobs, which are, frankly, nothing more or less than sinecures. Virtually nothing can dislodge these dynastic figures from their perches – not manifest incompetence, not proven corruption, and not an established pattern of business decisions that are obviously meant to serve their own families’ interests rather than the interests of shareholders, workers, or the firms themselves. Yes, the South Korean government is supposedly pushing reforms. But they’re weak reforms, insufficient reforms, and the degree to which the government is pushing for them is, frankly, pathetic. One thing is clear: if there’s going to be anything close to genuine change at the chaebols, the shareholders need to raise their voices more loudly, assert the power that’s rightfully theirs, and demand that these conglomerates shake off their Confucian roots and fully join the modern world economy. 

One ex-prez down, several chaebol CEOs to go

Samsung headquarters, Seoul

In recent weeks, we’ve been reporting – with a good degree of skepticism – on claims by the South Korean government that it’s engaged in a serious, vigorous, and comprehensive effort to curb the power of the nation’s largest capitalist monopolies. We’re referring, of course, to the chaebols, those massive, family-run conglomerates (including Samsung, Hyundai, and LG) that have dominated the South Korean economy over the last half century and more – so much so, indeed, that they routinely kill potential competitors in the womb and thus (as has been increasingly recognized and resented) stifle economic growth, discourage entrepreneurship, and squelch innovation.

Jay Y. Lee

Our skepticism on this front has been undergirded by such events as the sudden and unexpected release from prison, earlier this year, of Jay Y. Lee (Lee Jae-yong), the vice chairman and de facto head of Samsung (and arguably his country’s most powerful figure), after serving only a few months of a five-year sentence for corruption.

As if his release weren’t disappointing enough, Lee has since been invited by President Moon Jae-in, who poses as an anti-corruption warrior, to accompany him and a group of other chaebol bosses on a flight to Pyongyang, where they all explored possible business ties with the fanatically totalitarian, slave-labor-dependent Kim regime. Some reform!  

Lee Myung-bak

Well, there’s news from the supposed chaebol wars. No, a chaebol bigwig hasn’t been tossed in the clink. But another nabob has. On October 5, seventy-six-year-old Lee Myung-bak, who was President of South Korea from 2008 to 2013, was jailed for corruption. Arrested on March 22, he had been charged with receiving hefty bribes from Samsung and other firms, embezzling funds from the government treasury that had been appropriated for use by the nation’s intelligence services, and embezzling $21 million from an auto parts company that he owned through his brother. His sentence: fifteen years behind bars plus a $16 million fine.

Park Geun-hye

He’s not the only former president of South Korea who is currently serving time for corruption. His successor, Park Geun-hye, is six months into a thirty-three-year sentence. Two other South Korean presidents, as it happens, have also spent time in the slammer: Chun Doo-hwan, who held the high office from 1980 to 1988, and Roh Tae-woo, who succeeded Chun in 1988-93, were both convicted of bribery and sedition in 1996, and both were pardoned a year later.

Kim Sang-jo

If there is anything resembling reform underway in South Korea today, it may consist in the fact that corrupt presidents are now more likely to serve out their terms instead of being pardoned after a brief period of incarceration. But of course it remains to be seen whether Park and Lee are in the can for the duration or whether, like Chun and Roh, they’ll get sprung after the headlines die down. In the meantime, the self-styled “chaebol sniper,” Fair Trade Commissioner Kim Sang-jo, has yet to prove that he’s prepared to be as tough on current chaebol leaders as on the former presidents – who are, after all, being put away for engaging in illegal shenanigans with those very leaders.