A continuing saga… for those who are interested to know what happened to the chief of Hanwha and other chaebols whom were at the wrong end of the law. Is it real life imitating Korean dramas?
SOUTH KOREAN CONGLOMERATES IN FOR A MAJOR RESTRUCTURING:
The chairman of a South Korean conglomerate faces assault charges
International Herald Tribune, Published: May 24, 2007
SEOUL: In an abandoned building site on the night of March 8, the chairman of a South Korean conglomerate, flanked by bodyguards and hired thugs, bashed four cowering nightclub workers with fists, a stun baton and a steel pipe, the police say.
Later, according to the police, he drove to a bar in downtown Seoul where, as he and bodyguards watched, he let his son beat a man up in an eye-for-eye revenge for an earlier assault on the son.
Now, Kim Seung Youn, chairman of Hanwha, South Korea’s ninth-largest conglomerate, languishes in jail, having become the latest in a parade of prominent South Koreans, from presidents to tycoons, whose reputations have been besmirched because of what Koreans lament as “excessive parental love of children.”
From President Roh Moo Hyun to taxi drivers in Seoul, South Koreans called for a thorough investigation of the case, all the more so because it involved one of the country’s chaebol – family-controlled conglomerates – whose uncurtailed power has raised eyebrows in a country more ready than ever to scrutinize its rich and powerful.
“I hope there will never be a foolish father like me again,” Kim, 55, said in a news conference shortly before his arrest May 12.
Kim, a dapper businessman with trademark slicked-back hair, was reduced to slurping $2.70 meals and sharing a TV set with petty-crime suspects in a police lockup, while officers fine-tuned six charges of assault, abduction and confinement against Kim and 23 other men, including his chief bodyguard, who was arrested, and his son, a Yale University student.
The son has not been arrested, because he was also a victim, both the police and Hanwha officials said. The bar worker who allegedly beat him was not arrested either.
Kim, handcuffed, was transferred last Thursday to prosecutors’ custody for indictment. In South Korea, an arrest is made only with a judge’s approval and almost always leads to indictment and trial.
Korean parents have been known to take their dedication to their children’s well-being to extraordinary, and sometimes illegal, lengths. Widespread among parents until recently was the practice of giving schoolteachers envelopes containing bribes – euphemistically called chonji, or “a token of appreciation as humbly small as a finger joint” – to ensure that their children are treated properly at school.
Such an attitude, social commentators say, may explain why two successive presidents of South Korea, Kim Young Sam and the Nobel Peace Prize laureate Kim Dae Jung, were both humiliated toward the end of their terms because of their sons.
A son of Kim Young Sam went to jail for bribery. All three sons of Kim Dae Jung were convicted of crimes. Ordinary South Koreans lamented that even the visionaries who made fighting corruption a cornerstone of their rule lose their wits when it comes to coddling their wayward children.
In the corporate world, top executives at Samsung and Hyundai, the two biggest members of about three dozen conglomerates classified as chaebol, are fighting criminal charges in court that stem from the fathers’ alleged attempts to bequeath their companies’ wealth illegally to their sons.
Kim’s case “shows that some of the rational mechanism of a modern society remains crippled in South Korea,” said Cho Hae Joang, a sociologist at Yonsei University in Seoul. “Problems that must be dealt with through public means are handled through unofficial, private and family networks.”
While some observers dismiss it as a case of a fatherly love gone wrong, critics say Kim’s alleged crime reflects an entrenched problem in corporate Korea: a top down, command-and-compliance culture pervasive at South Korean conglomerates. The critics say that dictatorial whims of the “owner families” often go unchecked.
When a chaebol tycoon returns home from an overseas trip, a throng of executives and bodyguards greets him at the airport with a deep, collective bow – a scene people often associate with an Asian crime gang.
Last week, Lee Taek Soon, the national police chief, called Kim’s arrest “proof that law and justice are alive and kicking” in South Korea. For years, South Koreans have complained that prosecutors and judges do not punish convicted chaebol chairmen harshly enough, citing their “contribution to the economy.”
Chaebol, which means “rich clans,” spearheaded South Korea’s rise from the ashes of the 1950-53 Korean War to become the world’s 11th-largest economy. Today, a South Korean housewife may live in a Hyundai apartment, drive a Hyundai car, fill up at a Hyundai gas station, pay the bill with a Hyundai credit card and shop in a Hyundai department store.
Samsung, the largest chaebol, generates 20 percent of the country’s total exports, selling everything from semiconductors to supertankers.
But the chaebol road to wealth and power was paved with corrupt deals with politicians, brutal suppression of labor, allegations of opaque bookkeeping and extortion of parts suppliers, and tales of ashtray-hurling “one-man dictatorship” at corporate boardrooms.
Even if Kim is convicted, few doubt that he and his family will keep a tight control on his corporate empire, which includes the country’s second-largest life insurer, chemical and construction companies, hotels and a professional baseball team.
A typical chaebol family controls its empire with interlocking subsidiaries through cross-share holdings and by installing yes-man executives known as kasin, or “vassals,” as chief executives.
During a parliamentary hearing in 1997, Chung Tae Soo, a chairman of the bankrupt Hanbo Steel Group, who was imprisoned for bribery, said about his executives: “What do they know about the master? They are just servants.”
Kim’s case “revealed the backwardness of corporate governance at Hanwha and Korean chaebol in general,” said Kim Sang Jo, director at Solidarity for Economic Reform, a civic watchdog on big businesses. “All this results from emperor-like management style of chaebol chairmen.”
Kim Seung Youn’s trouble started on March 8, when his 22-year-old son, Dong Won, fell while scuffling with off-duty nightclub workers outside a karaoke pub and returned home with a facial injury that required many stitches.
The senior Kim – described by South Korean media as an entrepreneur long in charisma and business acumen, especially in mergers and acquisitions, but short in temper – went out looking for his son’s attackers.
He brought along with him the son, several Hanwha bodyguards and, the police said, at least one organized crime boss along with 11 “outside men” mobilized through Hanwha subsidiaries.
What followed has been the talk of the city. News media carried sensational details, some unconfirmed, of Kim’s alleged violence in front-page news for days in a row. Commentaries called Hanwha an “organized crime chaebol” or “Han-whack.”
Hanwha, a household name here, is short for “Korea Explosives.”
One news channel showed footage of Kim with the theme song from the American mobster movie “The Godfather” playing in the background.
“You beat him too!” the police quoted the father as telling his son when they found the son’s main attacker.
The case came to light only in late April after rumors spread through the Internet and some of the alleged victims talked to media. Kim at first denied any violence. He wanted his son, rather than taking the matter to the police, like a wimp, to “get an apology like a man,” Hanwha officials told media.
As the media hounded him and more witnesses stepped forward, however, Kim later admitted that he and his son had attacked the victims. But he denies using weapons, hiring gangsters, and taking the victims to a hillside construction site for a mob attack. These are serious charges that, if upheld in court, could lead to a lengthy prison term.
“The incident is the chairman’s personal problem,” said Ju Cheol Beom, a Hanwha spokesman. “But we are worried that it is hurting the brand image of our group.”
All the six alleged victims have agreed to accept financial compensation from Kim, said Choi Young Jo, a Hanwha vice president.
Choi declined to give further details. Such financial agreements are usually taken into account when a court gives a verdict on similar cases.
