When the head of Hyundai Motor was hauled off to jail last month accused of master-minding a huge slush fund, it looked like business as usual for graft-prone Korea Inc.
For years South Korean governments paid lip service to cleaning up corporate conduct and to raising business practices to international standards.
In reality they tolerated corporate wrongdoing characterized by cozy ties to politicians, reckless expansion and complete lack of transparency.
As long as companies kept producing and the economy kept growing, the government turned a blind eye. But after the Asian financial crisis of 1997-1998, the nation's over-extended conglomerates were on the verge of collapse.
Politicians finally decided to act but the arrest of Hyundai Motor's Chung Mong-koo indicates to what extend the corporate reforms they enacted have so far failed to bite.
"Old habits die hard and these are all decades-old diseases. It is hard to cure them overnight," said Lee Phil-sang, an economist at Korea University.
Frequent scandals have punctuated the decade since the financial crisis, culminating with the arrest of Chung, who presides over South Korea's second-largest business empire and the world's seventh-biggest automaker.
Prosecutors accuse Chung of using the slush fund to bribe government and financial officials as well as facilitating the transfer of corporate wealth and management control to his only son, Chung Eui-sun.
South Korea's biggest company, Samsung, accounting for 20 percent of the nation's exports, is also under investigation. Prosecutors are looking at alleged irregularities in the transfer of wealth from the Samsung Group's patriarch Lee Kun-hee to his son, Jae-yong.
The idea of Korea Inc was born in the early 1960s, when the past authoritarian government nurtured family-run business conglomerates, known as chaebol. As they grew, they were credited for transforming the poor, agricultural country into an industrial powerhouse.
But the imperious executives ran the companies for founding families and not for shareholders, pursuing expansion instead of profit, manipulating accounting books and developing complicated corporate structures to maintain their empire-building plans.
Economists say there has been considerable progress in efforts to improve transparency in accounting, mainly due to the increased influence from foreign investors after the Asian financial crisis.
"South Korea paid a huge tuition fee in the form of the financial crisis but it helped set the country in the right direction," Lee Phil-sang said. "But the latest scandals point to the need for the chaebol to go the extra mile in their efforts to improve transparency and corporate governance."
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
US President Donald Trump yesterday announced sweeping "reciprocal tariffs" on US trading partners, including a 32 percent tax on goods from Taiwan that is set to take effect on Wednesday. At a Rose Garden event, Trump declared a 10 percent baseline tax on imports from all countries, with the White House saying it would take effect on Saturday. Countries with larger trade surpluses with the US would face higher duties beginning on Wednesday, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (25 percent), Vietnam (46 percent) and Thailand (36 percent). Canada and Mexico, the two largest US trading
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary
RSS