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Unprecedented sentence seen as beginning of end to grip of chaebols

SEOUL - The conviction and jailing of South Korea"s top business tycoon heralds a drive to reform the country"s giant conglomerates and loosen their grip on the economy, analysts said.

When Lee Jae-yong, de facto head of the world"s biggest smartphone maker Samsung Electronics, was jailed on Friday for bribing South Korea"s former president and other offenses, the Seoul court condemned "corrupt ties" between business leaders and politicians.

It is far from the first time these links have been made public. South Korea"s chaebols, or family-run conglomerates, have long enjoyed close, opaque ties to political authorities.

"There is a well-founded concern that Korean corporations have too much financial influence over the political system through favors and friendships," said Robert Kelly, professor of political science at Pusan National University.

The chaebols were instrumental in South Korea"s rapid transformation into Asia"s fourth-largest economy - during which they received privileges in business and protection from foreign competition.

But as GDP growth has slowed, public frustration with the chaebols has mounted. They are accused of choking off innovation, distorting markets and engaging in corrupt practices to ensure founding families retain control.

When millions of people took to the streets to demand president Park Geun-hye"s ouster over a burgeoning corruption scandal, their anger was directed almost as much at the companies that paid her secret confidante Choi Soon-sil as at her.

After Park"s impeachment and dismissal, new president Moon Jae-in won a sweeping election victory campaigning on a platform of reform.

Samsung is by far the biggest of the chaebols, with its revenues equivalent to around a fifth of the country"s GDP.

Lee Jae-yong"s father, who remains Samsung chairman, was previously convicted of bribery, tax and other offenses himself, and the scion"s grandfather also had brushes with the law, but neither was ever jailed.

Chaebol leaders have regularly enjoyed such privileges in the past, with trials ending in light or suspended sentences and courts citing their contributions to the economy.

But imprisoning the vice-chairman of Samsung for five years - even though the sentence could be reduced on appeal - shows that now no one is immune, the thinking goes.

"The unprecedented jailing of the head of the country"s most powerful chaebol will serve as a catalyst for changing the whole society," said Chung Sun-sup, who runs specialist website chaebul.com. There have been promises of reforms before, from both sides of the political aisle, but they came to little.

Former Justice Party lawmaker Park Won-wuk blamed a lack of political will and resistance from the chaebols, which warn of negative consequences for investment and employment.

"No politicians have been really free from collusive ties with chaebols," said Park. "But Moon, differently from his predecessors, owes no debts to chaebols, and his top officials in charge of chaebol reform are thoroughly reformist.

"Lee"s imprisonment shows they are down to business quite seriously this time."

Corruption remains "the single biggest issue" in South Korea, Kelly said. The Transparency International watchdog ranked South Korea 52nd out of 176 countries in its perceptions index for last year.

Agence France-presse



2018-08-09 05:34:46


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