Seoul con­tenders tar­get chae­bol cul­ture

Pres­i­den­tial con­tenders pledge to shake up cor­po­rate gov­er­nance

Financial Times Middle East - - Front Page - BRYAN HAR­RIS — SEOUL

The fron­trun­ners for the South Korean pres­i­dency have vowed to end the cosy relationships be­tween govern­ment and big busi­ness — and the prac­tice of par­don­ing con­victed ex­ec­u­tives.—

The lead­ing con­tenders in the race for the South Korean pres­i­dency have laid out their cor­po­rate re­form agen­das, vow­ing to end pres­i­den­tial par­dons for con­victed top ex­ec­u­tives and promis­ing to shake up gov­er­nance at the con­glom­er­ates.

The re­marks to the Fi­nan­cial Times will chime with vot­ers hop­ing the im­peach­ment this month of Park Ge­un­hye as pres­i­dent will prove a turn­ing point for re­form in a na­tion plagued by cor­rup­tion.

How­ever, the com­ments will prob­a­bly raise con­cerns at the fam­ily-run chae­bol, par­tic­u­larly Sam­sung, whose de facto chief Lee Jae-yong is on trial on cor­rup­tion charges linked to the scan­dal that top­pled Ms Park. Mr Lee denies wrong do­ing .“We need to es­tab­lish the fair­ness of the law by ban­ning par­dons and in­creas­ing statu­tory pun­ish­ments so it is im­pos­si­ble for ex­ec­u­tives to get sus­pended sen­tences when they have com­mit­ted se­ri­ous crimes,” said pres­i­den­tial fron­trun­ner Moon Jae- in of the op­po­si­tion Democratic party.

Ahn Hee-jung, gover­nor of South Chungcheong prov­ince and Mr Moon’s main ri­val for the pres­i­dency, also vowed to end pres­i­den­tial par­dons, say­ing: “Un­prin­ci­pled im­mu­nity and re­in­state­ment go against ju­di­cial jus­tice.”

South Korea has a his­tory of­pres­i­dents par­don­ing con­victed ex­ec­u­tives of com­pa­nies they deem too big to fail.

Most re­cently, Ms Park in 2015 freed Chey Tae-won, chair­man of SK Group, who was con­victed of em­bez­zling more than $40m from com­pa­nies un­der his author­ity.

Now South Korean pros­e­cu­tors are ques­tion­ing se­nior ex­ec­u­tives at SK — the coun­try’ s third largest con­glom­er­ate — over al­le­ga­tions they paid bribes to a pres­i­den­tial ad­viser in or­der to se­cure Mr Chey’s par­don.

The cosy re­la­tion­ship be­tween big busi­ness and govern­ment has been a fea­ture of South Korean pol­i­tics since the 1960s when Pres­i­dent Park Chunghee be­gan us­ing the chae­bol to spur eco­nomic growth.

How­ever, the nexus has be­come in­creas­ingly fraught, with many South Kore­ans ag­grieved at the per­ceived bias in the coun­try’ s sys­tem of jus­tice.

“We need to res­o­lutely dis­con­nect the cosy re­la­tion­ship be­tween the govern­ment and busi­ness,” said Mr Moon, a for­mer hu­man rights lawyer who is dom­i­nat­ing polls.

The rhetoric may soon be put to the test if Mr Lee, ar­guably the coun­try’s most pow­er­ful man, is con­victed.

Sam­sung yes­ter­day said it could not “spec­u­late re­gard­ing the na­ture or ef­fect of fu­ture pol­icy decisions that may be un­der­taken by govern­ment ”.

“Sam­sung did not pay bribes nor sought any favours ,” it told the Fi­nan­cial Times. “We be­lieve fu­ture court pro­ceed­ings will clar­ify all is­sues and prove Mr Lee’s in­no­cence.”

Ac­cord­ing to a Real­me­ter sur­vey re­leased yes­ter­day, Mr Moon has nearly 37 per cent sup­port while Mr Ahn has about 15 per cent.

As both can­di­dates hail from the Democratic party, the re­sult of its party pri­mary in April is likely to of­fer a strong in­di­ca­tion of who will win the pres­i­den­tial poll on May 9.

The rul­ing con­ser­va­tive Lib­erty Korea party has found it­self with­out a clear can­di­date af­ter Hwang Kyo-ahn, the coun­try’s act­ing pres­i­dent, ruled him­self out last week.

Both Mr Moon and Mr Ahn have also vowed to boost cor­po­rate gov­er­nance by im­prov­ing trans­parency and tack ling the opaque own­er­ship struc­ture of many of the coun­try’ s top com­pa­nies.

“The key to chae­bol re­form lies in gov­er­nance and own­er­ship struc­ture re­form ,” Mr Ahn said.

Moon Jae-in, fron­trun­ner in the race to be­come South Korea’s next pres­i­dent

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