Samsung Scandal Revives Image Problems

[Sunite]

Samsung Scandal Revives Image Problems
By Kelly Olsen
November 16, 2007 7:41AM

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Corruption and bribery have been hallmarks of South Korea's business and political worlds for decades and Samsung is far from alone in finding itself at the center of scandal. Their roots can be found in ties developed during years of military-backed rule when family run conglomerates were leading South Korea's drive toward industrialization.

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   Electronics
   Scandal
   South Korea

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   South Koreans take great pride in Samsung, known worldwide for sleek flat-screen TVs, high-tech mobile phones, hulking container ships and major construction projects.

But a spreading bribery scandal has renewed old concerns about the perceived power and influence of the "Republic of Samsung" -- as the conglomerate has been called -- within the Republic of Korea, South Korea's formal name.

"Samsung has two faces," Kim Byung-su, the editorial page editor at the liberal Hankyoreh newspaper wrote. "The Samsung brand is a name recognized worldwide and makes you proud. Take a step back, however, and there is another Samsung."

In the latest scandal, Kim Yong-chul, a former top Samsung lawyer, went public this month with allegations that Chairman Lee Kun-hee and other officials masterminded a campaign to raise slush funds to pay prosecutors, judges and lawmakers and influence a high-profile court case.

Prosecutors launched a probe this week into the allegations, which Samsung has called "groundless" and "false" in a lengthy rebuttal.

Politicians across the political spectrum have called for an independent counsel, saying a probe by prosecutors could not be objective given that they allegedly accepted payoffs.

The issue has suddenly emerged as a hot topic in South Korea's presidential election, just a month away, with one party even claiming incumbent President Roh Moo-hyun, who is limited to a single term, received Samsung money.

Roh's spokesman has dismissed the claims.

Corruption and bribery have been hallmarks of South Korea's business and political worlds for decades and Samsung is far from alone in finding itself at the center of scandal.

Their roots can be found in cozy ties developed during years of military-backed authoritarian rule when family run conglomerates, or chaebol, were given the role of leading South Korea's drive toward industrialization.

Earlier this year, Chung Mong-koo, the chairman of Hyundai Motor Co., was convicted of embezzlement and breach of trust for raising a slush fund prosecutors said was used for bribery.

He was sentenced to three years in prison -- although the term was suspended on appeal when the presiding judge ruled that Chung played too important a role in South Korea's economy for him to go to jail.

Samsung is a sprawling empire of 59 companies with interests in shipbuilding, insurance, an amusement park, hotels, public relations and of course electronics.

For many Koreans, Samsung is more than just a business.

"It means South Korea," said Jang Ha-sung, dean of the business school at Korea University.

"If something goes wrong with Samsung that will have an immediate impact on every corner of Korea," he added. "It's not just because it is big, nor is it just because it is one of the multinational corporations we have. Because Samsung is embedded in the whole society." (continued...)

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