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Learning a lesson

Aug 29,2017
Major business lobbying groups in South Korea were all reluctant to take positions after the Seoul Central District Court sentenced Samsung Electronics Vice Chairman Lee Jae-yong to five years in jail last week. The Korea Chamber of Commerce and Industry, the Korea Employers Federation, the Korea International Trade Association and the Federation of Korean Industries did not even issue official statements after the court delivered a stunning ruling that could affect business activities in the future. The lobbying groups probably did not want to confront a new liberal government that is already pressuring them to stop some time-worn practices.

The judges primarily based their verdict on the alleged immoral collusion between political powerhouses and corporate powerhouses. Nevertheless, the judges did interpret Samsung’s act of giving bribes to former President Park Geun-hye as a type of passive compliance with her apparent request for financial support rather than an act of explicitly giving bribes in return for favors related to its business.

The court also said there was some room for consideration before handing down the verdict, because Vice Chairman Lee could hardly reject or ignore the president’s demand for financial help for projects involving her confidante Choi Soon-sil. In other words, the court reached a verdict about extenuating circumstances that confronted Samsung’s heir apparent.

After the ruling, the local business world is confused. Even though conglomerates need to follow the government’s policy directions and should refrain from provoking the government, the standards are not so clear. Local companies must learn a lesson from the trial, though the verdict and sentence will be appealed. They must provide any financial support transparently instead of covertly as Samsung did when it offered financial support for equestrian activities involving Choi’s daughter Chung Yoo-ra. As it turned out, the court did not find fault with Samsung’s funding of the K-sport and Mi-R foundations, but instead ruled it illegal for the group to dole out money for Chung’s equestrian activities and a suspicious equestrian training camp for youth while being aware that Choi was behind them all.

Large companies in South Korea are struggling to survive amid a plethora of challenges at home and abroad, including a raise in the minimum wage being pushed by the government. But they face another challenge now. They must learn a lesson from the Samsung trial for the sake of their business down the road.

JoongAng Ilbo, Aug. 29, Page 34