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.

Reforming chaebols? Or sucking up to Kim?

Samsung headquarters, Seoul

When it was announced last year, with big fanfare, that South Korea had finally gotten serious about tackling the outsized power of the chaebols, we were instantly cynical. This was, after all, hardly the first time that the government in Seoul had vowed to put Samsung, Hyundai, and the other family-run conglomerates in their place. But it never happened. Instead, the same old pattern continued: the chaebols kept throwing their weight around, kept paying huge bribes to public officials in exchange for laws, permits, and exemptions favorable to their business activities, and using their near-monopolistic market positions to smother fledgling firms in their cradles. Every now and then the head of a chaebol would get put on trial for corruption, and inevitably the case would either go away or the boss man, after being found guilty, would be given a get-out-of-jail-free card.


The latest case in point was that of Jay Y. Lee (Lee Jae-yong), vice chairman and de facto head of Samsung, who was sentenced to five years in prison last year only to be freed this year. On September 18, President Moon Jae-in, who not so long ago had essentially declared zero tolerance for chaebol corruption, hopped on a place with Lee and other chaebol honchos and flew with them to Pyongyang to explore the possibility of doing business with the Hermit Kingdom, perhaps even building factories in that totalitarian land. Even as their exploratory talks with Kim Jong-un were underway, Moon’s corruption czar, Kim Sang-jo, head of the Fair Trade Commission, was making his informal title of “chaebol sniper” look pathetic.

“With exports of semiconductors one of the few bright spots in an economy that’s showing signs of strain,” noted Livemint, the Indian business news website, on the day Lee & co. jetted northwards, South Korea’s “reliance on its most profitable company is deepening and thus reducing regulatory pressure on Samsung.” Chung Sun-sup, a corporate analyst, confirmed that the South Korean government “needs Samsung now.” Bruce Lee, CEO of Zebra Investment Management, agreed that the nation’s faltering economy “means a halt in chaebol reforms.” And Kwon Young-june, an expert in corporate governance at Kyung Hee University, concurred. “Reforms are dying on the vine,” he said. “The government will find itself more and more in need of conglomerates as long as it is fixated on quick results rather than long-term reforms.”

Indeed, by escorting the chaebol kingpins to Pyongyang, Moon was doing the very opposite of what he had promised: rather than limiting the power of the chaebols, he was doing his best to expand their power. What kind of head of state lowers himself to the role of chaperon, escort, cicerone, sherpa? With this one move, Moon provided the whole world with a vivid illustration of where the power really resides in South Korea. Did he serve them coffee on the plane, too?

But that wasn’t all. Far from curbing chaebol criminality, Moon was taking actions that seemed likely to invite criminality. North Korea, after all, is subject to strict international sanctions that would almost certainly be violated by any significant business arrangement with the chaebols. Lee Seok-ki, a researcher at the Korea Institute for Industrial Economics and Trade, told the Korea Joongang Daily that “if we only look at the cost side, North Korea has more labor cost effectiveness than any other country on the planet – even Vietnam and China.” Well, yes – making use of slave labor by people who are forced to live on starvation diets tends to bring down wages. Surely, to any decent observer, the very idea of the filthy-rich chaebols maximizing their profits by employing the brutalized subjects of the Kim dynasty is as reprehensible a business proposition as one could imagine – and is also, of course, as far as possible from any concept of reform.

“Chaebol sniper” or chaebol masseur?

 

Kim Sang-jo

Last January, the Economist offered an optimistic forecast of the future of South Korea’s economy under Kim Sang-jo, that country’s newly appointed antitrust czar. Kim’s task, during his three-year term, was to “tame the chaebol,” those massive, family-run corporate conglomerates that were the engines of South Korean economic growth after since the Korean War but that in recently decades have increasingly served as a hindrance to further growth – and, in particular, to the establishment and successful development of small businesses. (The Korean language even has a word – gapjil – for the way in which the chaebol bully more modest-sized enterprises.) Moreover, the chaebols, which were once universally admired for having led South Korea out of Third World status, are now more and more the objects of public resentment because of their top leaders’ chronic corruption and impunity.

Moon Jae-in

At the time of his appointment, Kim, a former activist for the rights of shareholders, enjoyed the strong backing of President Moon Jae-in as well as of the great majority of his countrymen, who refer to him as the “chaebol sniper.” All these months later, has he lived up to that nickname? How much, exactly, has he accomplished?

For a close reader, the article in the Economist contained a few hints that Kim might, in fact, prove to be something less than a bull in the chaebols’ china shops. “The sniper,” we read, “would rather his targets surrender willingly and is encouraging ‘voluntary’ reform.” Some sniper! Indeed, the Economist admitted that some critics of the chaebols “carp that Mr Kim now seems to be more chaebol sympathiser than sniper,” though the Economist was quick to assure us that this view of Kim was “unfair.”

Hanjin Group headquarters, Seoul

Fast forward five months. Kim, reported the Korean media, was accusing the Hanjin Group, the parent company of Korean Air, of “breaching market rules.” At a press conference marking the end of his first year on the job, the “chaebol sniper” lamented the standard practice by chaebols of doing business with, say, real-estate firms and ad agencies that are affiliated with them rather than dealing with independently owned firms in those same sectors. “I honestly ask conglomerates,” said Kim, “to sincerely review if it necessarily needs these businesses that are owned solely by their controlling families.”

Wow, tough talk!

Samsung headquarters, Seoul

Kim said his agency had “tried to work on encouraging conglomerates to change their…management practices.” Tried? Encouraging? “We’re seeing positive changes,” he said, but “we still have a long way to go.” He said he regretted “not being able to bring changes that the public can actually feel,” and admitted that some observers might feel that his achievements thus far had fallen “short of expectations.”

No kidding. Is this a sniper or a masseur?

South Korea: tame chaebol reform, or none at all?

 

Moon Jae-in

In South Korea these days, the billion-dollar question is this: is the administration of President Moon Jae-in serious about reforming the systematic corruption that’s been a national institution ever since Samsung, Hyundai, LG, and the other so-called “chaebols” began dominating its economy?

The history of chaebol criminality – which has largely taken the form of bribes to top government officials – goes back to the years following the Korean War. For decades, the South Korean public has increasingly cried out for reform. President Moon, who took office last year after his predecessor, Park Geun-hye, was removed from office on corruption charges, has called chaebol corruption a “deep-rooted evil.”

But does he mean it? Or are the stiff sentences handed down in August to Moon’s crooked predecessor, Park Geun-hye, and her friend and partner in crime, Choi Soon-sil, a fluke?

Park Geun-hye

Then, of course, there’s the other, depressingly familiar, possibility: will Park and Choi, like their fellow crook, Samsung chief Lee Jae-yong (aka Jay Y. Lee), and a raft of convicted CEO-felons and presidents before him, end up being let out of jail on some technicality that leaves the entire country even more cynical about their judiciary’s dedication to equality before the law?

Kim Sang-jo

Well, so far Park and Choi remain behind bars. And only days after their conviction was affirmed – and their sentences enhanced – by a high court, South Korea’s Fair Trade Commission (FTC) proposed new rules to govern the chaebols. The head of the FTC, Kim Sang-jo, who has acquired the nickname “the chaebol sniper,” has declared his determination to take on the ownership strucures of the two largest chaebols, Samsung and Hyundai.

Bruce Lee of Zebra Management

An abiding problem at these and other conglomerates has been that the families that founded them still rule them like kings, routinely making sweeping managerial decisions while ignoring the input of shareholders. Kim’s stated goal is to diminish the power of those families, whose grip on their conglomerates well exceeds their relative value of their ownership shares in those conglomerates.

How to address that problem? Well, under current regulations, a chaebol must own at least 20% of its listed subsidiaries and 40% of unlisted units. Kim’s new rules would raise those figures to 30% and 50% respectively.

Robyn Mak

That’s not all. Members of a chaebol’s founding family would not be allowed to have more than 15% of the voting rights in a listed affiliate of that chaebol. Other new rules would also limit the power of corporate kingpins to pull off mergers or spin off subsidiaries without shareholder support. They would also clamp down on circular shareholdings and other intra-conglomerate machinations and intensify disclosure requirements.

Yet in the eyes of serious observers, the commission’s proposed changes are too little, too late. “I would give 20 points out of 100, a basic score, to what the Moon government has done for corporate governance reform,” Bruce Lee of Seoul-based Zebra Investment Management told Bloomberg News.

Commentator Robyn Mak called the proposed new regulations “the first rewrite of antitrust rules in nearly four decades,” but added that given the slow growth of South Korea’s economy, the chaebols are in the catbird seat. “That means corporate governance reform probably will wind up weaker than originally anticipated.”

Indeed, modest though Kim’s proposed changes are, “Moon will struggle,” maintained Mak, “to gain political support to enact some of the new ideas.” We’ll keep abreast of developments.

South Korea: Will President Park’s 25-year sentence hold?

Samsung headquarters in Seoul

On the South Korea corruption front, the news keeps outdoing itself.

As we’ve noted before, the South Korean economy is dominated by a handful of conglomerates known as chaebols, all of them run by powerful and famous families. Over the decades, members of these families have been caught committing massive acts of corruption. They used to get away with it, usually, because the chaebols were viewed as having lifted South Korea up into the ranks of first-world nations and the families that ran them were objects of near-reverence. In recent times, however, South Koreans have increasingly viewed the chaebols as a hindrance to further economic growth, and as a result have been less tolerant of corruption on the part of their celebrated bosses.

Park Geun-hye

On this site we’ve been following the biggest corruption scandal in South Korean history. Over the past couple of years, investigators have been probing interactions between Samsung, the largest of the chaebols, and Park Geun-hye, who was president from February 2013 to March 2017. Those investigators eventually found that a close friend of Park, Choi Soon-sil, had taken a huge sum of money from Samsung in exchange for permission from Park to merge two of Samsung’s subsidiaries.

Lee Jae-yong (aka Jay Y. Lee)

The consequences of these findings have been dramatic. A quick round-up: in February 2017, prosecutors arrested Samsung’s de facto head, Lee Jae-yong, known in the West as Jay Y. Lee. In March 2017, Park was removed from office and replaced with Moon Jae-in, who promised the South Korean people that he would take action to limit the power of the chaebols. Alas, this is the oldst promise in South Korean politics. Presidents are always saying that they’ll rein in the chaebols, and they never do. In the same way, the CEOs of chaebols are always being arrested on charges of bribery, embezzlement, and the like, only to go free after little or no time in jail.

And that’s what happened to Jay Y. Lee. Last August, after a five-month trial on a range of charges, he was found guilty of everything and was sentenced to five years behind bars. This past February, however, without any warning, a judge sprung him from prison, providing an utterly absurd excuse for doing so.

To many South Koreans, this stunning move – this instant unraveling of justice – seemed to spell an end to any hopes of real reform.

Choi Soon-sil

Is there any possibility that South Korean authorities will do anything to suggest that they’re serious about tackling chaebol corruption? Look at the case of former President Park, who’s been in jail since last year. This past April, a lower court sentenced Park to 24 years and $16 million in fines for bribery, extortion, abuse of power, and other charges. In late August, a higher court, noting that she’d taken even more cash from Samsung than previously believed, bumped her sentence up to 25 years and $18 million. On the same day, her friend Choi was given a 20-year sentence. Meanwhile, in two additional trials that concluded in July, Park was sentenced to a total of eight more years in jail for breaking election laws and illegally spending government money.

Will these sentences hold? Or will Park and Choi be dealt the same get-out-of-jail-free card that Jay Y. Lee was handed? Stay tuned. In the weeks to come, we’re going to be giving these high-level hijinks the closer scrutiny they deserve.

Bourdain’s “unspoiled” Havana

Anthony Bourdain

On Tuesday we contemplated Anthony Bourdain, whose recent self-slaughter inspired hundreds of heartfelt eulogies by foodies – and others – around the globe. The smart set had lost one of its own, and the mood of the day was one of profound mourning. What torments, everyone wondered, had plagued the culinary genius? There was endless hand-wringing about the psychological anguish he must have suffered. Interestingly, very few of his necrologists so much as mentioned his 11-year-old daughter, Ariane, let alone paused to contemplate the very special and profoundly destructive kind of psychic affliction it is for a child, especially one around 11 years old, to lose a parent to suicide.

But that’s neither here nor there. We were talking about Bourdain’s superior attitude toward fellow celebrity cooks who made money in ways of which he disapproved. Over the course of his lifetime he worked for any number of major corporations – but in his view that was different than the kind of deals that people like Paula Deen made with major corporations.

Of course, Bourdain’s professed contempt for capitalism was the purest hypocrisy. Few practiced capitalism more successfully than he did. If he enjoyed sneering at capitalism, it was because he knew that such B.S. would only enhance his image with his fan base.

Unspoiled Havana

Meanwhile, however, as Humberto Fontova reminded us the other day, Bourdain had no such qualms about promoting Communism. He did multiple shows from Cuba for CNN and the Travel Channel (capitalism, anyone?). On the Travel Channel website, he had a page headlined Tony Bourdain’s Guide to Cuba. He led “junkets” to Cuba. All these activities, of course, put hard currency in the pockets of the Castro regime, thus helping it to hang on to life – and to continue to harass, jail, beat, torture, and execute political “enemies,” gays, and others. As Fontova noted, Bourdain concluded one 2011 Cuba program by telling the audience: “Yes, Go to Cuba!”

Inside one of those world-class Cuban hospitals

In his CNN episode on Cuba, he described Havana, whose dilapidated ruins testify to the destructiveness of Communism, as “unspoiled.” He went further than that, saying that it was “one of the more beautiful cities I’ve ever seen.” He claimed to dislike Communism but the most critical thing he would say about Castro was that he had “decidedly mixed emotions” about him. He also regurgitated the usual Cuban propaganda about the country’s supposedly great schools and first-class medical care (yes, for the nomenklatura). “In Cuba the religion is baseball,” he said. No mention of the fact that for decades after the Cuban Revolution, actual religious practice was suppressed.

“If only Bourdain had demonstrated 1/100 of his vaunted ‘spunk’ and ‘feistiness’ against a regime that jailed political prisoners at a higher rate than Stalin during the Great Terror, murdered more Cubans than Hitler murdered Germans during the Night of Long Knives, and craved to nuke his homeland,” commented Fontova. Bingo.

Anthony Bourdain: bashing capitalism, cheering Cuba

Anthony Bourdain


When Anthony Bourdain chose to off himself on June 8, millions mourned. He was a member of that ever-growing tribe, the celebrity chefs – people who have used books and TV to turn themselves into superstars and millionaires, all the while introducing their fans to culinary experiences from around the world.

It all began with his bestselling 2000 book Kitchen Confidential, following not too long thereafter by the first of several TV series that combined food with travel. Well, actually, of course, it began before the book – with stints as top chef at several leading restaurants in New York City. His signature gig was at the Manhattan branch of Brasserie Les Halles, where he started working as executive chef in 1998 and with which he maintained a relationship until it closed its doors last year.

For some folks, that career would’ve been enough. But not Bourdain. He also wrote fiction. In 2011, Ecco Press gave him his own publishing line. He produced and starred in his own movie. To his admirers, he was not just one more globetrotting guy sampling exotic fare on camera – he was a “rock star,” a “culinary bad boy,” a – well, you get the idea.

Alice Waters

But as Gore Vidal once said, “It is not enough to succeed. Others must fail.” Among the other celebrity chefs who felt the sharp edge of his carving knife was Guy Fieri. Bourdain dismissed Rachael Ray as a no-talent. He trashed Wolfgang Puck’s “shitty pizza restaurants.” We don’t even know who Sandra Lee is, but he called her “pure evil.” We do know who Alice Waters is – she runs the legendary Chez Panisse restaurant in Berkeley California, and made her name by promoting fresh, locally sources foods. Her crime, in Bourdain’s book? Her agenda isn’t PC enough – it doesn’t take into account either poor people or sustainability.

Bourdain’s take on Paula Deen was also partly rooted in PC considerations. Bourdain called Deen “the worst, most dangerous person to America.” Why? Well, one reason was that her recipes were too high-calorie. Another reason: “her food sucks.” Reason #3 – and here’s the PC part: “She revels in unholy connections with evil corporations…she’s unconscionable, cynical, and greedy.”

Paula Deen

Then there’s this: “I will never eat in his [Donald Trump’s] restaurant. I have utter contempt for him, utter and complete contempt… I’m not going. I’m not going.” Last year, when asked what he would serve if asked to cater a peace summit between Trump and Kim Jong Un, Bourdain said: “Hemlock.” How courageous of Bourdain to express a political view that he had to know 99% of his fans would cheer.

A few years back, Waters came up with a terrific way of getting back at this pompous fool: she started a pseudonymous Twitter account under the name “Ruth Bourdain.” After the secret came out, she explained: “Well, Tony has always been something of an ass to me. So there’s that. But he also represents this tremendous dark-side of the human psyche. He is drugs, and sex, and rock music.”

He was also, as his comments on Deen makes clear, a world-class hypocrite – a man who got rich on capitalism but was quick to demonize others who dared to try to make a buck. Meanwhile, as Humberto Fontova pointed out after Bourdain’s suicide, this man who “wore his ‘anti-corporate hipness’ on his shirtsleeve, always smirking and snarking that ‘evil corporations’ and ‘crass commercialism’ repelled him,” was at the same time “a shameless tourism agent for the Castro-Family-and-Military Crony-Crime Syndicate, a thieving, murdering criminal-corporate empire that makes the Mafia look like Boy Scouts of America.”

What? More on Thursday.

Promoting Marxism in the U.K.: Youssef El-Gingihy

An East German stamp honoring Marx

Last week, in the wake of Karl Marx’s 200th anniversary, we discussed on this website a couple of recent New York Times op-eds, both by academics with impressive-sounding credentials.

One of them, Jason Barker, sang Marx’s praises and hoped for a time when his magnificent ideas will be implemented by some enterprising government; the other, James A. Millward, while never mentioning Marx or Communism, cheered Communist China’s current approach to international relations, comparing it very favorably to that of the current American president.

Youssef El-Gingihy

But the New York Times isn’t alone in its enthusiasm for Marx and his heirs. The Independent, a left-leaning British broadsheet, celebrated Marx’s birthday with an article headlined “The world is finally ready for Marxism as capitalism reaches the tipping point.” As evidence of Marx’s current relevance, the piece’s author, Youssef El-Gingihy, noted that “[t]he world’s most populous state and rising superpower, China, is officially communist, albeit nominally.” It wasn’t entirely clear what one was to make of El-Gingihy’s description of China as only “nominally” Communist. Was he suggesting that China is not, in fact, a totalitarian or authoritarian country? Does he dissent from the verdict of, for example, Freedom House, which considers China “Not Free”?

Hugo Chavez

El-Ginghy, an Oxford-educated physician and ardent champion of Britain’s National Health Service, further noted that “socialist ideas remain prevalent throughout the world,” and as an example of this prevalence he cited “the Chavismo new left wave of Latin American politics.” He added that chavismo is “admittedly now in the process of being rolled back” in Venezuela, although it would have been a good deal more honest, of course, to say that chavismo is in the process of dying a torturous death at its own hands – and is taking heaven knows how many Venezuelan lives with it. El-Gingihy also pointed to the electoral successes of Bernie Sanders in the U.S., of “unapologetic socialist Jeremy Corbyn” in the U.K., and of Jean Luc Mélenchon in France as examples of just how popular Marx is in the West – though we consider them proof of just how ignorant many Westerners are of the monstrous reality of Marxism.  

Mao Zedong

Denying that the fall of the USSR discredited Marxism, El-Gingihy argued that, on the contrary, the 2008 worldwide financial crash discredited capitalism. “Mao Zedong’s description of capitalism as a paper tiger seems as pertinent as ever,” he wrote, apparently unashamed to be citing with approval the most murderous individual in human history. Mao, El-Gingihy suggested, was only one of many brilliant figures who constitute Marxism’s “rich legacy of thinkers.” El-Gingihy praised the Communist Manifesto as “a call to arms, as well as a work of canonical sublimity and literary fecundity; by turns poetic, inspired and visionary.” And he concluded by asserting that in a time when “late capitalism is economically, socially and ecologically unsustainable, not to mention bankrupt,” Marx is the answer. How bizarre that, in a time when free markets are lifting up economies and radically improving the lives of ordinary people around the world – even as the utopian, reality-defying ideas of Marx’s followers have turned places like North Korea, Cuba, and Venezuela into nightmarish hellholes and killing fields – presumably intelligent people are still capable of raising their fists in Marxist solidarity.  

In the “Republic of Samsung,” it’s (corrupt) business as usual

Lee Jae-young

For many people in South Korea, the arrest, trial, conviction, and imprisonment last year of Lee Jae-young – that country’s richest man and the de facto head of Samsung, the country’s largest business – signaled the start of a bright new era. After decades of corruption in the chaebols, the powerful family-run conglomerates that have dominated the postwar South Korean economy, the ouster last year of President Park Geun-hye and her replacement by Moon Jae-in, who promised that the traditionally well-connected leaders of these firms would no longer operate with impunity, seemed indeed to represent radical and long hoped-for change.

Park Geung-hye

Yet, as we discussed on Tuesday, all hopes for revolutionary reform were crushed last month when a High Court judge abruptly ordered Lee (known in the West as Jay Y. Lee) freed from prison.

Lee, according to Bloomberg News, “appeared stunned.” So, reported the Wall Street Journal, were “some South Korean lawmakers and legal experts.” The South Korean public was stunned, too. And angry. Street protests ensued. Moon had promised change, but this was business as usual. Over the decades, one chaebol honcho after another had been tried on corruption charges only to be found not guilty, or convicted and then pardoned, or – as happened with Lee’s father in 2008 – given a suspended sentence. Meanwhile, as the New York Times has noted, South Korean courts have “routinely sentenced lesser-known white-collar criminals to far longer terms for lesser offenses.”

Here it was all over again. “The ‘Republic of Samsung’ lives on,” griped Professor Kwon Young-june of Kyung Hee University. The judge’s decision, complained Park Yong-jin, a member of the National Assembly, only “confirmed once again that Samsung is above the law and the court.”

A view of the site of the Pyeongchang Olympics

Indeed. The High Court’s ruling – which came only days before the opening of the Winter Olympics in Pyeongchang, South Korea – is absurd on its face. Among the items of evidence that senior judge Cheong Hyung-sik chose to drop down the memory hole was a set of 39 handwritten notebooks in which an economic adviser to President Park recorded specifics about bribes paid to Park by Lee. Other exhibits in the trial included documentation of exchanges between Park to Lee that made clear the nature of the quid-pro-quo between them.

Samsung headquarters, Seoul

Many commentators had been arguing that South Korea is in the process of changing its stripes; nobody can seriously make that argument now. Lee is a criminal for whom prosecutors sought a sentence of 12 years in prison: that’s how serious they considered his transgressions to be. The prosecutors demonstrated that Lee had committed embezzlement, illegally hidden assets overseas, and lied to the parliament under oath. They proved definitively that he had paid bribes in return for government support for a merger that, as the Financial Times put it, “was crucial for Mr. Lee to cement his hold on the organisation, but was widely criticised for not benefiting shareholders.” As one politician observed, by way of underscoring the absurdity of the High Court’s ruling, Judge Cheong appeared to expect the world to believe that Lee had handed over a fortune to President Park in return for absolutely nothing whatsoever.

So it stands, then. For a brief shining moment there, it looked as though South Korea had experienced a new birth of justice and equal treatment under the law. Alas, Lee’s release shows that under Moon, the old rules remain in place.

Lee is free – and South Korean reform is dead

We’ve been writing about Samsung since September 2016, when we explained the distinctively South Korean type of family-run corporate conglomerate known as the chaebol. “The simple fact,” we noted, “is that pretty much everybody in the South Korean government is on the chaebols’ payrolls – or wants to be. And the growing popular resentment of this grand corruption is an extremely good sign.”

Park Geun-hye

A couple of months later we reported on charges that South Korea’s then President, Park Geun-hye, had helped a friend, Choi Soon-sil, extort huge sums of money from several of the chaebols. The largest chaebol, Samsung, which accounts for some 17% of South Korea’s economy, gave Choi over $15 million. By December 2016, the official probe into this corruption uncovered that the sum extracted from Samsung was closer to $20 million. In return, President Park allowed the merger of two Samsung entities.

Lee Jae-yong (aka Jay Y. Lee)

In January of last year came the news that prosecutors had barred Lee Jae-yong – the de facto head of Samsung, grandson of its founder, Lee Byung-chul, son of its official chairman, Lee Kun-Hee (who stepped down from day-to-day management, but did not relinquish his title, after a 2014 heart attack), and arguably the most powerful man in South Korea – from leaving the country. In February Lee (who in the West goes by the name Jay Y. Lee) was arrested; in March, Park was removed from office.

Her replacement, Moon Jae-in, promised to curb the power of the chaebols, whose domination of the nation’s economy has thwarted new business development, whose cozy ties to government leaders have caused widespread suspicion and resentment, and whose leaders’ ability to escape punishment for large-scale corruption has made them seem to be above the law.

Moon Jae-in

Lee’s trial began in March. Dubbed “the trial of the century” in South Korea, it involved five charges: bribery (maximum possible sentence: five years), embezzlement (eight years) perjury (ten years), concealing criminal proceeds (five years), and hiding assets abroad (life). Prosecutors asked for a sentence of twelve years. In August, after five months of testimony, Lee was found guilty of all five charges and sentenced to five years in prison. He was thereupon “sent to a prison for white collar criminals in Uijeongbu.”

Then, last month, came a startling development. Lee, who had appealed his sentence, was taken from his prison cell and transported to the Seoul High Court. There, presiding senior judge Cheong Hyung-sik informed him that he was to be released immediately and would be on probation for four years.

Lee in handcuffs

Cheong – who, technically speaking, had not reversed or commuted Lee’s sentence but cut it in half and then suspended it – maintained that Lee’s only real offense was to have succumbed understandably to inordinate pressure exerted on him by Park Geun-hye while she was serving as President. “Park threatened Samsung Electronics executives,” claimed the judge. “The defendant provided a bribe, knowing it was bribery…but was unable to refuse.” Not a small number of South Koreans regarded this as a thoroughly absurd argument. 

More on Thursday.