Arrest at Samsung is an opportunity for S Korea

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The arrest of Lee Jae-yong, the “crown prince” in charge of South Korea’s Samsung, could be seen as emblematic of the rot that pervades the country’s political and corporate superstructure. Or it could be seen as a shining example of independent institutions enforcing impartial rules in a fledgling democracy, in a region where such accountability is often unthinkable. Which of these views prevails will depend on what happens next.  

The multi-billionaire scion of Samsung’s founding family, Mr Lee has just spent the first of what could be many weekends in a single-person cell in the Seoul Detention Center. He faces charges of perjury, embezzlement and bribery in connection with claims that his company funnelled cash to a “shaman adviser” of President Park Geun-hye in exchange for favourable political treatment of Samsung deals. 

His arrest on Friday morning is just the latest shock to hit the nation, and the company, in recent months. In addition to impeachment proceedings against President Park, South Korea is facing fresh nuclear threats from the sinister Stalinist regime in Pyongyang, unprecedented uncertainty in its relationships with China and the US, stagnant exports and the rising threat of protectionism. 

Likewise Samsung, a company with a market capitalisation roughly equal to 20 per cent of the country’s GDP, has been hammered in the last year by the $5bn recall and termination of its exploding Galaxy Note 7 smartphone, several lawsuits and the allegations that led to Mr Lee’s arrest last week. 

The country can operate for a while without its leader and so can Samsung. But the longer a vacuum exists at the top of both, the more much-needed governance reforms will be delayed.

 In Samsung’s case the westernised Mr Lee, who asks English-speaking friends to call him “Jay”, has already outlined an aggressive agenda of corporate governance reforms, plans to improve shareholder returns and a drive for global acquisitions. 

Because of this and the potential damage his incarceration could cause to the country’s most important company, many in South Korea will be tempted to show him leniency. 

This would be a mistake. If Mr Lee is found guilty then he must be punished to the full extent of the law. Likewise, if a fully transparent and fair legal process determines his innocence, then he must not be made a convenient political scapegoat.  

Mr Lee’s father, Lee Kun-hee, who remains titular chairman of Samsung despite being incapacitated by a heart attack in 2014, was twice convicted of financial crimes while at the helm of the company. But in both cases the sentences were suspended and his record subsequently expunged by presidential decree.  

A similar outcome for his son — conviction followed by political pardon — would send the worst signal to Korean society and the wider Asian region, where Seoul still stands out as a beacon of democracy and the rule of law.  

Regardless of whether the younger Mr Lee is found guilty or innocent, whoever becomes president following elections later this year will have a golden opportunity to rein in the power of Korea’s mighty family-owned chaebol industrial groups. 

Instead of cosying up to these families as many of their predecessors have, the next president must vow to scrutinise and reduce the unseemly ties between politicians and big business. If they can do that convincingly then South Korea — and its corporate titans like Samsung — will emerge from the current turmoil stronger and more inspirational than they were before.

emblematic : 상징적인

rot : 부패

fledgling democracy : 초보 민주국가

scion : 자손

perjury : 위증죄

funnel : 쏟다

sinister : 사악한

Stalinist : 스탈린주의자의

incarceration : 투옥

leniency : 관대

scapegoat : 희생양

titular : 명목상의

incapacitated : 질병으로 인해 정상생활을 하지 못하게 된

conviction : 유죄선고

expunge : 삭제하다

decree : 법령

cosy up to S/B : 이득이 될만한 사람에게만 친하게 굴다

scrutinize : 세심히 조사하다

turmoil :  혼란

[황진우]

Warming up : Could you define what justice is?

Q1. After Korean war, only South Korea has grown up so fast. What makes S. Korea so prosperous?

Q2. Some say the crisis of Samsung ends up S. Korea's crisis. Do you agree with this?

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Q3. Let's imagine that you are the president of S. Korea. Unfortunately, the country faces severe economic crisis and your regime does not have money.
In this case, do you want to compromise with chaebol? cf. (By giving presidential amnesty or tax cut etc.)

Q4. Now I think current regime is running on empty and the next should recover all of it. What will be the top priority?