Sun, Jul 10, 2016 - Page 7 News List

Public anger forces Seoul to crack down on white-collar crime

For corporate scofflaws, South Korea used to be a surprisingly forgiving environment, and courts routinely suspended the sentences of tycoons convicted of bribery, embezzlement or tax evasion, citing the potential impact on their corporate empires and, by extension, the country’s economy

By Choe Sang-hun  /  NY Times News Service, SEOUL

Looking for answers after the deaths of scores of children and pregnant women from a mysterious lung ailment, a group of families in South Korea began to focus on a potential cause: a cleaner called Oxy.

In 2011, South Korean officials suggested that toxic chemicals in Oxy, used to sanitize humidifiers and sold by British consumer-goods maker Reckitt Benckiser, and similar products were responsible for the deaths — 95 have been confirmed by the government, which is also reviewing hundreds of additional cases reported by families, who claim more than 460 fatalities. The government’s punishment for Reckitt Benckiser: A US$45,000 fine for falsely advertising Oxy as safe for humans.

Five years later, simmering anger over the deaths has hit Reckitt Benckiser — and prompted widening hostility to white-collar crime that is directed at foreign and local companies alike.

South Korean prosecutors last month arrested three local Reckitt Benckiser employees and charged them with professional negligence resulting in deaths. When a Reckitt Benckiser executive publicly apologized last month, a relative of a victim jumped onstage and slapped him in the back of the neck.

South Korean prosecutors are also considering bringing criminal charges against local Volkswagen executives stemming from investigations into the automaker’s cheating in emissions tests, while lawmakers have significantly raised fines for violating emissions rules. Officials this month raided the homes and offices of top executives of Lotte, a major South Korean conglomerate, to collect evidence of alleged embezzlement. Lotte has said it is cooperating.

To outsiders, South Korea’s rash of criminal investigations and prosecutions against corporate officials make it look unusually aggressive in pursuing white-collar crime. However, South Korean analysts and critics said the tough actions show the opposite: Government officials have little power to brandish big fines or other civil penalties, as their counterparts in the US and Europe do.

“When people are outraged, the government has few things to show to them except asking prosecutors to get involved,” said Kim Pil-soo, a professor of automotive engineering at Daelim University College, who has followed the Volkswagen scandal.

For corporate scofflaws, South Korea can be a surprisingly forgiving environment. Fines are modest. Until recently, courts routinely suspended the sentences of tycoons convicted of bribery, embezzlement or tax evasion, citing the potential impact on their corporate empires — and, by extension, the country’s economy. Class-action lawsuits and court awards are limited.

The soft treatment is a legacy of South Korea’s hard-charging economic past. In the decades after the 1953 Korean War armistice, military dictators in South Korea favored businesses — especially a handful of corporate families known as chaebol — with tax benefits, cheap electricity and bank loans, and brutal crackdowns on labor activists.

However, there are signs that South Koreans’ patience is running thin. In a study a year ago commissioned by the government’s Korea Legislation Research Institute, more than half of about 3,000 people queried said they did not believe South Korean businesses abided by the laws, while more than two-thirds said business regulations against pollution should be strengthened.

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