Korea Must Disentangle Government from Chaebol

      December 07, 2016 13:09

      The chiefs of Korea's nine biggest conglomerates appeared on Tuesday before a National Assembly hearing about the corruption scandal involving President Park Geun-hye and her shadowy confidante Choi Soon-sil.

      The last time the heads of the powerful chaebol or family-owned conglomerates all had to explain themselves before lawmakers was a corruption scandal 28 years ago involving the regime of Chun Doo-hwan. The spectacle is in itself a disgrace. The crux of the hearing was whether Cheong Wa Dae promised them favors in return for the billions of won they paid into two dodgy foundations controlled by Choi. But they all denied it.

      Hur Chang-soo, the GS Group chairman and leader of the Federation of Korean Industries, said, "It's a Korean reality that if there is a government request, it is difficult for companies to decline."

      Samsung chief Lee Jae-yong, whose conglomerate gave the biggest sums not only to the nonprofits but also to Choi directly under various pretexts, repeatedly apologized and admitted to "improper support." He even vowed to dismantle the group's de facto control tower, the strategic planning office. But he too claimed Samsung has "never ever" bribed anyone for favors.

      Big business lobby FKI eagerly coordinated the donations on behalf of Cheong Wa Dae, and its leaders too now agree on the need to overhaul the organization. Korea's economy has grown 10 times since the chaebol chiefs were last summoned before lawmakers in 1988, and the conglomerates' global clout has grown even more. Yet when it comes to their role as the effective ATMs of successive presidents, nothing has changed.

      Prosecutors have yet to find concrete evidence that the conglomerates were promised favors since Park met with their leaders in private, but this is one of those situations where "everybody knows," whether the paperwork ever turns up or not.

      The hearings were gleefully reported around the world, and Korea once again stands publicly shamed as a country where ties between the rulers and big businesses are too cozy to say the least. This must not happen again.

      Big businesses must become more transparent in their management and ownership structures so they can resist pressure from the government or well-connected individuals. They cave into government pressure because they are afraid of being brought to book for their habitual fiddling of tax laws and other regulations.

      At the same time, a way must be found to prevent powerful government officials from using tax authorities and prosecutors as tools at their disposal, to free big businesses from becoming hostages to politicians and their cronies.

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