The current South Korean corruption scandal (which we’ve been discussing this week) has blighted the images of the Brobdingnagian conglomerates – among them Samsung and Hyundai – that are known in that country as chaebols. Once admired – even revered – for helping transform South Korea into a respected powerhouse of technological production, the chaebols are now increasingly seen as oases of inherited wealth and privilege whose position of dominance and massive competitive advantage are unfair to start-up entrepreneurs and extremely unhealthful for the economy as a whole. That the chaebols have been shown again and again to be infected by immense levels of corruption at the loftiest levels has only further darkened their public image.
So has the staggering degree of impunity enjoyed by the highest-ranking chaebol executives and their families. As we noted in September, “however criminal or incompetent the head of a chaebol may be, he enjoys invulnerability and unaccountability on a scale unheard of in any other developed democracy.” As one South Korean businessman put it: “At companies in advanced countries, a faulty CEO is replaced. But at South Korean conglomerates, the head of a conglomerate wields absolute authority and is not replaced no matter how grievous his mistakes are.”
One of the matters being investigated in connection with the current scandal is the charge that President Park Geun-hye, in 2013, ordered her then economics secretary to pressure CJ Group (one of the largest chaebols) to fire its chairwoman, Miky Lee Mie Kyung. Lee, the granddaughter of Samsung founder Lee Byung Chul, had apparently angered Park by producing entertainment programming that was “unfavourable to the government.” In a clandestinely recorded conversation, Cho darkly warned CJ Group executive Sohn Kyung Shik “that there would be consequences if the request was not followed.”
As we’ve seen, prosecutors have been interrogating some of the top guys at the very biggest chaebols. But prosecutors aren’t the only officials who want to talk to the chaebol honchos: on November 21, the ruling and opposition parties in the South Korean parliament agreed to summon the heads of the seven largest chaebols to testify as witnesses in that body’s own investigation of the scandal. Among them is Hyundai chairman Chung Mong-koo, who nine years ago was pardoned by then president Lee Myung-bak after being found guilty of embezzling $100 million to bribe government officials. Another prospective witness is SK Group chairman Choi Tae-won, who three years ago was pardoned by President Park after being found guilty of embezzling over $40 million. These guys, in short, are old hands at being caught with their hands in the till – and then being set free so they could resume their thievery.
Their testimonies are scheduled for the parliament’s first hearing on the scandal, on December 5; eight days later, Choi Soon-sil herself, the woman at the center of the whole shebang, will be questioned at another parliamentary hearing along with other suspected participants. We’ll be sure to keep our readers updated on developments.