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| 'South Korea's Enron': Investigators in a corruption probe seized documents from Samsung Securities' Seoul headquarters on
Friday. Han Jae-Ho/Reuters |
As Samsung investigation continues, South Koreans face up to their 'tradition' of graft
Prosecutors cleared presidential candidate Lee Myung Bak on Wednesday. But the corruption case against Samsung, the country's largest company, continues.
from the December 6, 2007 edition
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That explanation helps account for why bureaucrats, professors, and company people are often rumored to give large sums to superiors and contacts for promotions, contracts, and rule-bending. For Samsung, South Korea's largest chaebol, and other large groups, the stakes can be much higher.
The Samsung investigation is sure to go on much longer than the probe into the fund run by Lee's former business partner and may well have much deeper implications for the chaebol. Samsung's sales last year accounted for 17 percent of the country's nearly $900 billion GDP.
"The chaebol are still in a dark age," says Jang Ha-sung, dean of business at Korea University in Seoul. "Although our society has changed, the chaebol dominate the economy. They are at every corner of life in Korea."
The massive investigation surrounding the group is based on accusations by its former top lawyer, who says executives stashed more than $200 million in corporate funds in more than 1,000 secret accounts in order to pay off influential public officials.
"Any corporation is involved in these scandals," Park says. He accuses the former Samsung chief counsel who exposed the slush funds of betraying his former bosses after having "got all the favors from them."
Despite widespread public revulsion, scandals surrounding Samsung and Lee Myung Bak appear to have done little to reverse a conservative trend in which government economic policies – not corporate mismanagement – are blamed for unemployment and slow growth.
At political rallies, Lee shouts pledges to "reform the economy" and "bring jobs," in part by loosening regulations seen as impeding the chaebol. At the same time, he tells cheering crowds "a smear campaign" surrounding his past is "all lies."
Mr. Jang, a long-time crusader for shareholders' rights, believes the Samsung case "is more significant for Korea than Enron was to the United States." Enron, the energy company that went bankrupt in 2001 after falsifying profits, was far smaller than the Samsung group, whose 60 companies account for 20 percent of the shares on the Korea Stock Exchange.
Jang sees the scandals as darkening the entire campaign. "People get confused," he says. "These candidates are all the same. They are not talking about what they will do if elected."
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