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Tuesday
Aug292017

Andy Spalding: The South Korea revolution continues

Samsung's Lee Jae-yongFriday’s conviction of Lee Jae-yong, the de facto head of South Korea’s flagship Samsung conglomerate, marked yet another dramatic step in the country’s anti-corruption revolution.

The third-generation leader of Samsung, Mr. Lee was sentenced to five years in prison for bribery, embezzlement, hiding assets abroad, concealing criminal profits, and perjury. The principal criminal activity was a series of payments totaling $38 million to the close friend and advisor, Choi Soon-sil, a self-styled shaman, to then-President Park in exchange for the government’s approval of several business deals.

Ms. Park, already impeached and removed from office in March, separately faces 18 criminal charges, including bribery.

Mr. Lee is likely to meet a very different fate than his father, Lee Kun-hee who in 2009 was similarly convicted for corruption while leading Samsung.  The senior Mr. Lee served no jail time, receiving a presidential pardon.

But that was then, and this is now.

Culturally and legally, South Korea is now turning against a social and economic order that for decades has promoted social cohesion and dramatic economic development, but at the expense of transparency and accountability.

The chaebol -- large family-run conglomerates of which Samsung is the most famous example -- were critical to South Korea’s economic recovery following the Korean War. The country’s dramatic transition from post-war devastation to an “Asian tiger” that today is the world’s 11th largest economy might never have happened without the close cooperation of the government and the chaebol. But the coziness of industry and government was a breeding ground for conduct that South Koreans now perceive as corruption.

So too did the country’s Confucian cultural norms emphasize promoting social cohesion through the symbolic affirmations of respect and affection we now call gifts. But these gifts were, at the very same time, both symbolic statements of genuine sentiment and the calculated purchasing of influence.

The April 2014 sinking of the Sewol Ferry, in which over 300 passengers, mostly students, drowned, became a catalyst to changing cultural norms. The sinking was widely attributed to systemic corruption within the agencies charged with enforcing safety regulations. In this scandal’s wake, the country passed the 2016 Kim Young-ran act, an historic anti-corruption law named after the former Supreme Court Justice who authored it.

Following enactment of this new law, the Korean legislature impeached, and the Supreme Court removed from office, President Park Geun-hye for corruption charges. Mr. Lee’s conviction should be understood as the next major event in this historic anti-corruption revolution. Samsung accounts for nearly one third of South Korea’s stock market value. This is a big deal.

Like Brazil before it, South Korea is now widely perceived as a state in crisis, and wrongly so. These new statutes, enforcement actions, convictions, and impeachments are not evidence of a society in decline, but of the ascent of the rule of law. Remember, the corruption is now new. What’s new -- that is, what’s news -- is the accountability. And it’s good news indeed.

_____

Andy Spalding is a lecturer at the International Anti-Corruption Academy, Professor at the University of Richmond School of Law, and Senior Editor of the FCPA Blog.

Reader Comments (2)

I've been working in Korea for more than 20 years now, and have lived here as a Koreanist for 27 years. In my lifetime we have seen the eradication of petty corruption in government, but when I travel to law conferences and people figure out I work in Korea I get cornered and regaled with appalling stories of grand corruption. These stories are fewer and fewer, even as I attend more and more conferences. We may indeed be seeing the final death rattle of Korea's business-as-usual festival of grand corruption.

That said, much of Korea's corruption problem stems from overweening state authority and control. We could do with a reset that introduces private remedies for conduct which is now addressed mainly by criminal enforcement.
August 29, 2017 | Unregistered CommenterBrendon Carr
While the fact that Lee Jae-yong is sitting in jail right now indicates an improvement in Korea's anti-corruption regime, there still are many judges in Korea who are incredibly generous to white collar criminals who steal money from their companies, especially if the defendant is very rich and powerful. By the way, matters related to Constitutional law are handled by the Constitutional Court. Thus, former President Park Geun-hye was removed from office by the Constitutional Court.
September 1, 2017 | Unregistered CommenterWanki "Joseph"Hong
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