In S. Korea, the rich are innocent, and the poor guilty

Minister of Justice Hwang Kyo-ahn takes an elevator to participate in a plenary session of the National Assembly in Seoul, Oct. 1, 2013. (by Lee Jeong-woo, staff photographer)

Minister of Justice’s comments about letting corrupt chaebol chairmen off the hook weaken the rule of law

By Kwak Jung-soo, business correspondent

“I was in despair at the thought that I would have to spend three or four years in prison, and this news came as a breath of fresh air.”

After Justice Minister Hwang Kyo-ahn hinted that he would allow chaebol chairmen convicted of corruption to be pardoned or released on parole, hope is returning to the faces of chaebol executives who are in prison or on trial for breach of trust and embezzlement.

The Ministry of Justice is trying to shift the blame, claiming that it remains committed to the just execution of the law and that the media is reading too much into the remarks. But the chaebol are confident that they know Hwang, and that he wouldn’t make such remarks flippantly. A former public security prosecutor nicknamed “Mr. National Security Law,” Hwang is famed for his meticulousness.

At the same time, Choi Kyung-hwan, Deputy Prime Minister and Minister of Strategy and Finance and a major powerbroker in the government, endorsed Hwang’s remarks. “I wholeheartedly agree with what Hwang said in the interest of stimulating the economy,” Choi said.

The story made the headlines in the conservative media. The Justice Minister broached the topic, the Deputy Prime Minister picked up the baton and fanned the flames, and the conservative media is working to build public support. It is truly odd that all of these things are taking place while President Park Geun-hye is overseas.

It remains to be seen whether Hwang and Choi had worked this out in advance, whether the conservative media is spinning the story, and whether both sides are in cahoots. For now, though, we should stop to consider the pros and cons of going easy on corrupt chaebol chairmen.

During her presidential campaign, Park espoused strengthening the rule of law. She promised to strictly prosecute chaebol chairmen for embezzlement and other serious crimes, and she vowed to curtail the excessive use of pardons. This is almost the only one of her campaign pledges about economic democratization that remains intact.

The president does not have to keep her promises, provided she has adequate reasons not to do so. Choi said that the economic recovery is stalling because of sluggish investment. The groups in question are complaining that they are facing difficulties in deciding on new investments because of the absence of the group chairmen. But will releasing the corrupt company heads actually increase investment?

“The ratio of investment to GDP in South Korea is the second highest in the OECD. The main reason for slow economic growth is not that there isn’t enough investment, it’s that there isn’t enough consumption,” said Jang Ha-seong, professor at Korea University.

Some chaebols could temporarily increase investments in order to create a pretext for releasing the group chairmen. But that sort of abnormal investment is not sustainable.

Choi also said that it isn’t right to prosecute someone more severely simply because they are involved in business. However, the fact is that corrupt chaebol heads in Korea have never suffered from reverse-discrimination. If anything, controversy about weakening the rule of law has continued because these company leaders have been let off easy. It even gave rise to the new expression, “The rich are innocent, and the poor are guilty.”

“In the past, chaebol chairmen were still treated respectfully even after they got out of prison, but now it is a shame,” said Park Yong-man, chair of the Korean Chamber of Commerce. Park was emphasizing the need for patience, since change takes time. Letting corrupt chaebol chairmen off the hook could undo the progress that South Korean society has made in establishing the rule of law, the principle that everyone is equal before the law.

In the long run, pardoning corrupt chaebol chairmen could kill the economy instead of saving it. Kim Sang-jo, professor at Hansung University, believes that the fundamental issue with the South Korean economy is that the market economy has a weak foundation. In a society where the rules of the games are not obeyed, where corners are cut and laws are broken by those with money and influence, the economy cannot develop, and creativity and innovation cannot flourish.

Twelve years ago, Roh Moo-hyun was elected president on the pledge that he would become the first president to actually reform the chaebol. But Kim Jin-pyo, vice chair of the presidential transitional committee, made remarks to the opposite effect. “We will work on reform gradually and gently,” Kim said. Roh neglected to address this, and before long he made public his retreat on chaebol reform, admitting that the market - that is, the chaebol - had taken control.

Today, the South Korean people have a question for President Park. Is she going to take South Korean society back to the time when the rich are innocent, and the poor guilty?

Please direct questions or comments to [english@hani.co.kr]