SAMSUNG HEIR VERDICT HERALDS REFORM DRIVE

Court decision heralds efforts to loosen giant firms’ grip on S. Korea economy, say analysts

SEOUL smartphone maker Samsung Electronics, was jailed on Friday for bribing South Korea’s former president and other offences, the 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.

The chaebols were instrumental in the “Miracle on the Han” during which they received privileges in business and protection from foreign competition.

Several established global reputations while their hundreds of thousands of employees became the backbone of South Korea’s new middle class.

But as gross domestic product 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 corruption scandal, their anger was directed almost as much at the companies that paid her 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.

The imprisonment the vicechairman of Samsung for five years shows that now no-one is immune, the thinking goes.

Lee was also found guilty of perjury and other offences.

“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.

Kim Joon-woo, of Lawyers for a Democratic Society, said the Seoul Central District Court’s decision was nudging South Korea towards a “more transparent capitalist economy.”

“We welcome it as a warning signal over the dishonourable ties between politicians and businesses,” he said.

Moon plans to loosen the concentration of economic power in the chaebols’ hands, curbing unfair trade practices including cross-subsidies between units and implementing tougher regulations. AFP