Samsung pushed the world’s focus onto South Korea this week. The conviction of its company leader called a heightened stance against corporate giants manipulating the economy.
“Corrupt ties” between leading businesses and politicians were condemned by the Seoul Court. This came after Samsung’s heir and de facto leader, Lee Jae-Yong, was given a five year sentence. Chief among his offenses is bribing South Korea’s ex-president.
The news this week was not a surprise to the Asian state. It is common knowledge in the region that family-owned businesses enjoy the luxuries of legal immunity. This hold over South Korea’s political system and economy is now under a governmental crackdown.
According to political experts in the country, Jae-Yong’s case promises to be one of many incoming scandals.
Samsung leaves no one safe
Robert Kelly is a political science professor at Pusan National University. He reports that the issue of top Korean businesses pushing legal conflicts aside is “well-founded”. Kelly goes on to say they “have too much financial influence over the political system through friendships and favors”.
Government ties to family-run businesses are a clear part of South Korea’s history. The country had a fast transition from war-torn to Asia’s fourth-biggest economy. That did not happen without the investment of the country’s richest families. Today they enjoy the economic control and security from international competitors.
It is not just Samsung either. Industry juggernauts like Hyundai and LG are known for harnessing a poorly paid working force to drive their skyrocketing profits and reputations. The wealthy turn a blind eye, too. The work of the country’s conglomerates is becoming the support system of the middle class.
The people of the South Korea grew even more frustrated with powerhouses once the economy slowed. It was the corrupt work of the founding families in their desperation to stay in control, people accused.
The protection offered to the likes of Samsung, being safeguarded from external competition and bids for self-advancement have choked the economy. In turn, this leaves the powerful families with more control over South Korean markets, with very little opposing their malpractices.
With an oppressive economy in place, and South Koreans virtually hired for life by powerful companies, many youth activists are fed up. They have no hope for self-advancement as long as the economy remains a plaything of powerful citizens.
Former South Korean president Park Geun-Hye stepped down this year after a bribery scandal opened a can of corruption cases. When citizens took to the streets in protest, they were just as infuriated by the corporations that paid her.
Samsung case changes South Korea
The previous Justice Park regulation maker asserts that no politician is truly free from powerhouse ties. But the current president has no ties to such corporations, allowing him power to reform the economy at will.
Not long after Park’s impeachment and leave of office, Moon Jae-In took Geun-Hye’s place as president. The current leader’s campaign was received overwhelmingly. Jae-In scored a sweeping election victory after promising mass reform of the country’s political norms.
Samsung is among the greatest of the South Korean family-run businesses. The company accounts for about one-fifth of the country’s GDP. Its scandals are not entirely new either, but there has been nothing as big as Jea-Yong’s take-down.
The heir to Samsung empire didn’t fall too far from the tree. His father, still chairman at company, has a history of convictions related to bribery, tax evasion and other legal disputes. His father before him was not without his own legal brushes either.
The Samsung leader’s sentence was rather light, some argue. Then again, light sentences, lowered fines, cases ending up in the air and under indefinitely suspensions are about a common. It’s a tricky situation for some, consider the vast contributions they make to the country.
The Samsung case shows the country’s willingness to stand up to the rich and powerful, despite their influence. It is true that Jae-Yong could get a lowered sentence after his appeal. However, starting at the very tops shows that no one is off limits.
The whole chaebol society in South Korea will tread lightly now. The company is on track to securing a more open and free-flowing capitalist economy. In spite of the political headwinds, Samsung shares have climbed upwards of $500 this year alone.