Business As Usual in Korea

Posted by: Ihlwan Moon on January 3, 2008

It is business as usual in South Korea where white collar crimes are often regarded as less serious offences, particularly when they involve chieftains of the chaebol (or sprawling conglomerates). At the start of 2008, Kim Woo Choong, the founder of the now-defunct Daewoo Group who was convicted of masterminding an accounting fraud in 2006, was granted a presidential amnesty. He was also founded guilty of embezzlement and other financial crimes related to the biggest corporate failure in the country’s history.

Such amnesties and often lax enforcement of rules and laws under President Roh Moo Hyun’s administration are why liberal economists accuse him of failing to deliver promised reforms. Sure, Kim is 71 years old and is weak. But the man whose 8-1/2-year jail term was confirmed in November 2006 by a Seoul appeals court had his sentence suspended on ground of ill health more than a year ago. Even before the clemency order, he could enjoy medical care in any hospital of his choosing.

In fact, no corporate bosses drawn from the chaebol’s founding families were forced to serve out their jail terms. They were not forced to step down after being convicted for embezzlement or accounting fraud either. In recent years, for example, Hyundai Motor Chairman Chung Mong Koo and SK Chairman Chey Tae Won were jailed for several months for their convictions, but then they went back to their positions to run their companies.

The chaebol and the government like to talk about the principles of free markets. But a key principle of the free market is rule of law and a game under fair rules. That means violators of the rules and law must face severe penalties. Lenient treatment of white collar crimes won’t help the economy in the long term.

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