Seoul searching

Seoul searching

As the heir to the Samsung empire finds himself in the midst of a storm, South Koreans are bracing themselves for another high-profile controversy, this time involving the country’s largest conglomerate. Friday’s arrest of Lee Jae-yong is in connection with the same influence-peddling controversy where Parliament voted overwhelmingly in December 2016 to impeach the country’s first woman President, Park Geun-hye. The constitutional court has another few months to dispose of the impeachment petition over a scandal that saw hundreds of thousands of people take to the streets towards the end of 2016. South Korea has barely recovered from the blow from the recall of Samsung’s fire-prone Galaxy Note 7. The company is one of the country’s largest, and its fortunes have a direct bearing on the national economy. Prosecutors now accuse Mr. Lee of paying about $37 million to organisations run by the President’s close confidante. In return, it is alleged, Samsung secured government support to clinch a questionable merger of two affiliates in the conglomerate. Mr. Lee’s recent arrest follows new evidence presented on the disputed contributions. Last month, a pre-trial warrant sought by the prosecution was rejected, as the court saw little ground for his detention in the absence of sufficient evidence to substantiate the bribery charge. While Mr. Lee has admitted to making the grants, he denies any accusations of bribery.
The overall stakes in the prospects of Samsung could not be greater, given that the entity is one of the country’s largest employers; its revenues amount to a substantial chunk of South Korea’s gross domestic product. The impact of the current development would also be of some concern given the global climate of uncertainty from protectionism. At the same time, legal proceedings under way involving some of South Korea’s electronics giants are evidence of the unhealthy nexus between corporations and officialdom coming under systematic scrutiny. This is a reassuring sign for the long-term image of any brand, as well as for South Korean politics and governance. The notion that giant firms that contribute to economic growth and overall prosperity are too big to fail, or be prosecuted, is said to influence the large number of pardons granted in South Korea. Several top captains of industry have been let off, at times even without serving jail terms. The fallacy of carrying that logic to an extreme seems to be giving way to a recognition of the need for transparency and democratic accountability in the governance culture of firms, something South Korea has struggled to achieve over the years. In its absence, mitigating economic and social inequalities would merely remain empty objectives. Citizens of one of Asia’s largest economies deserve a better deal, as they themselves made clear through recent rounds of protest. It is time for some serious introspection in Seoul.