Samsung Denies Corruption Charges

December 12, 2007 12:26 PM
by findingDulcinea Staff
The largest conglomerate in South Korea faces bribery allegations; the case is the latest in a number of investigations into the senior executives of the nation’s dominant, family-owned corporations, the “chaebol.”

30-Second Summary

On Oct. 29, 2007, former Samsung legal adviser Kim Yong-cheol accused the Samsung Group of bribing public officials from a $220 million slush fund.

With nearly 60 affiliates, the company accounts for approximately one-sixth of South Korea’s gross domestic product and about one-fifth of the country’s exports and stock market value.

More than a financial giant, "Samsung's influence surpasses the economic level and reaches out to influence politics, society, culture and even ideology,” Kim Sang-jo, executive director of the group Solidarity for Economic Reform, told Reuters.

In the extent of its influence, Samsung is a representative example of the family-owned chaebol conglomerates, which are typically authoritarian in management and politically influential.

For decades the chaebol have commanded respect in South Korean society for pulling the nation out of the difficult times following the 1950–1953 Korean War.

In the past year, however, some commentators have detected a sea change in the nation’s attitude to the chaebol.

Both the Chairman of Hyundai Motor Company Chung Mong-koo and Hanwha Group Chairman Kim Seung-youn have been involved in separate scandals, though they emerged with relatively minor penalties.

The courts justified the lenient sentences applied on the grounds that the economy would suffer if these chief executives were unable to do their jobs.

The current situation differs from those earlier cases in that it involves a whistleblower who claims to have witnessed corruption firsthand.

That said, Yonsei University Economics Professor Sung Tae-yoon argues that the national stakes remain the same. “If Samsung’s business started to shake, ordinary people would feel the effects,” Tae-yoon told Reuters.

In contrast, Bloomberg News columnist William Pesek writes that this could be South Korea’s “Enron” moment, a purge that will be beneficial to the country in the long run.

Headline Link: Investigators expand Samsung probe

Background: A rash of corporate scandals in South Korea

Hanwha Group

Opinion & Analysis: Whistleblowers and transparency

Key Player: Samsung and Kun-hee Lee

Related Links: South Korean society


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