S. Korea braces for bribery trial of Samsung executive
With president also in trouble, times may be changing for elites
What is being billed as South Korea’s trial of the century opens Thursday as the de facto leader of Samsung Electronics faces bribery and embezzlement charges, part of a larger web of scandal that forced the impeachment of President Park Geun- hye in December.
Company Vice Chairman Lee Jaeyong, 48, is accused of paying more than $ 37 million to a close associate of Park’s in exchange for government backing of a merger between two Samsung subsidiaries to cement his power atop the giant conglomerate, which is run as a family dynasty.
On Monday, special prosecutor Park Young- soo released the findings of an inquiry into bribery and influence- peddling charges that led to the indictment of 30 people, including Lee and the president’s longtime confidante Choo Son- sil. The findings directly implicate the president, leaving her vulnerable to prosecution if her impeachment is upheld by a court that will rule Friday.
Lee’s trial has touched a raw nerve in South Korea about the role of Samsung and other massive conglomerates, known as chaebols.
Chaebols such as Samsung, Hyundai and LG played a leading role in the country’s dramatic rise after the Korean War as a global manufacturing giant. But chaebols are widely seen as corrupt and above the law, resembling feudal dynasties more than modern international businesses.
A sense of arrogance, especially among the offspring of chaebol leaders, has become a flashpoint. In 2014, a Korean Air vice president delayed a flight because she was furious about how flight attendants served macadamia nuts, setting off an uproar in what’s now known as the “nut rage.”
Many South Koreans, particularly the middle class and independent business people, feel the same economic anxiety and populist resentment that have roiled world politics, says Rodger Baker, vice president of strategic analysis at Stratfor, an Austin- based geopolitical advisory firm.
“They’ve seen over the last 10 or 15 years a real degradation of opportunities for small and medium enterprises, for local mom- and- pop shops that used to be the backbone of the domestic Korean economy,” Baker says.
Chaebols control an enormous share of the Korean economy, with the 10 biggest accounting for 80% of the gross domestic product. Samsung, the largest, is known internationally for its TVs, smartphones and other consumer electronics, but in South Korea its reach extends to construction, shipbuilding, clothes, chemicals, insurance, credit cards, hospitals — even an amusement park.
Chaebols’ size and power make reforming them daunting. “These things are very, very difficult to unwind or impossible to unwind without taking a major hit on economic activity,” Baker says.
South Korean business tycoons usually operate with impunity. Lee’s father, former Samsung chairman Lee Kun- hee, was found guilty of criminal tax evasion in 2008 but was pardoned by thenPresident Lee Myung- bak, partly because he was helping with the country’s Winter Olympics bid.
Now public sentiment is pushing for prosecution of these powerful people, and special prosecutor Park has a reputation for going after conglomerates.
Lee’s trial, which could last months, carries a possible 20- year sentence if he is convicted.
If the court upholds the impeachment motion against President Park, a presidential election will be held within 60 days. The front- runner, former opposition leader Moon Jae- in, has pledged to rein in the chaebols’ power.