Samsung’s pardon exposes Koreans’ love-hate feelings toward tycoons | Business and Economy

Seoul, South Korea – When US President Joe Biden visited South Korea in May, his first stop was a large Samsung Electronics semiconductor plant south of Seoul.

Biden’s tour guide was Lee Jae-yong, the de facto leader of Samsung, South Korea’s largest conglomerate, which has ramped up chip production in recent years to maintain an edge in the highly competitive industry.

The optics of the visit were key for Lee, who, like many South Korean business tycoons, has a checkered past. Appearing with Biden was part of a process to rehabilitate Lee’s image after a criminal conviction, analysts say.

That process culminated in South Korean President Yoon Suk-yeol naming Lee on Friday among the recipients of a presidential pardon to mark Liberation Day, which marks the end of Korea’s occupation by part of Japan from 1910 to 1945.

Lee’s appearance at the factory, and the optics of a US president who prioritized Samsung technology, “diminished public anger against Samsung by highlighting its top-tier technology and global market dominance” , Kim Sei-wan, professor of economics at Ewha. Womans University in Seoul, he told Al Jazeera.

Lee’s pardon was not unexpected. Presidents typically grant pardons for the holiday, which falls on Monday, and in previous years business leaders found guilty of corruption or unfair business practices have been among those granted clemency. Lee’s father, former Samsung chairman Lee Kun-hee, received two presidential pardons.

This year’s list of pardons included other high-profile business figures such as Kang Duk-soo, former chairman of trading and ship maintenance conglomerate STX Group, and Chang Sae-joo, chairman of Dongkuk Steel Mill Co.

South Korean President Yoon Suk-yeol has said he hopes the latest round of pardons for people with criminal convictions will help the country overcome its economic difficulties. [File: SeongJoon Cho/Bloomberg]

Before Friday’s formal announcement, Yoon, the standard-bearer of the conservative People’s Power Party, said he hoped the pardons would be an “opportunity for all our people to come together and overcome the economic crisis” caused by COVID-19. 19 pandemic.

Samsung’s Lee was sentenced to five years in prison in 2017 after being convicted of bribing then-president Park Geun-hye as part of a corruption scandal that rocked the country and led to the impeachment of Park of charge.

Lee served 19 months in prison before being paroled last year. The pardon is significant as it removes any restrictions on what role Lee can play within the company and could pave the way for him to formally take over as chairman of Samsung Group.

Samsung has tentacles that stretch across South Korea’s economy and is the largest employer, leading many in the country to regard it as more than just another company, but a national icon.

It is the world’s leading manufacturer of memory chips and is working hard to compete with semiconductor leader Taiwan Semiconductor Manufacturing Co in the foundry sector.

“Positive impact on the economy”

Advocates of Lee’s pardon hailed the decision as a recognition of Samsung’s role as a key player in the global race for chip supremacy and of the industry’s importance to South Korea’s economy driven by exports

“Since Samsung’s core businesses, such as semiconductors, require huge and risky investments, timely decisions by the top leader are important,” said Kim, the professor. “In this sense, the pardon can have a positive impact on the economy.”

In a July poll conducted by current affairs magazine Sisain, 69 percent of respondents said they would support a pardon for Lee.

Sisain attributed the strong support for clemency to the public perception that, as the leader of the country’s flagship company, Lee contributes to the economy.

When Samsung patriarch Lee Kun-hee received his second presidential pardon in 2009 following convictions for embezzlement and tax evasion, then-President Lee Myung-bak justified the decision as necessary to allow the businessman to participate in South Korea’s bid to host the 2018 Winter Olympics.

Former chairman Lee, who is not related to the Samsung family, was himself later jailed on corruption charges and had been an unsuccessful candidate for the latest round of pardons.

Samsung logo on a glass window.
Samsung is South Korea’s largest employer, leading many in the country to regard the company as a national icon. [File: Jo Yong-Hak/Reuters]

For detractors, Samsung’s continued ability to evade responsibility for serious crimes sends a dangerous message to the leaders of the conglomerates that dominate the economy.

“Pardons weaken the rule of law and make conglomerate leaders appear above the law,” Yang Junsok, an economics professor at Catholic University, told Al Jazeera.

A Samsung Electronics workers’ association issued a statement denouncing the pardon on the grounds that granting leniency to Lee amounts to tacit support for the company’s anti-union stance.

“What Lee Jae-yong’s pardon symbolizes is the end of Samsung’s money laundering strategy that nullifies the punishment of those responsible,” the group said in a statement.

With Lee now a free man, South Koreans are waiting to see if there will be any economic windfall. In a statement on Friday, Lee said he would honor the consideration shown by the government and the public and “contribute to the economy with continued investment and job creation”.

Yang said that, at least in the short term, Lee would make moves that give the impression of boosting South Korea’s economy.

“Lee will be morally or feel compelled to do something that can improve the economic situation, so he might have to go ahead with the investments that Samsung has promised,” Yang said.

A bridge is submerged by the previous day's torrential rain on the Han River in Seoul, South Korea, August 9, 2022
South Korean President Yoon Suk-yeol’s popularity has plummeted amid a series of challenges, including floods that have killed more than a dozen people. [File: Reuters]

By pardoning Lee, Yoon, a career prosecutor, may have been trying to create a positive, if moderate, economic boost. Just three months into his term, Yoon’s administration has been plagued by scandals and setbacks. Earlier this month, his approval rating fell to 29 percent, down from 44 percent in June.

After entering office with no prior political experience, Yoon’s first performance has validated some critics’ concerns that he was unprepared for the country’s top job.

His choice for education minister recently resigned after announcing a policy to lower the school starting age by one year caused a sustained backlash and this week issued an apology public after heavy rains in Seoul caused massive flooding that killed more than a dozen people.

Even as he faces general pressure, Yoon is unlikely to dwell too much on his decision to pardon the Samsung scion, analysts say.

“Lee’s pardon is in line with South Korean business tradition,” Geoffery Cain, author of “Samsung Rising” and senior fellow for critical emerging technologies at the Lincoln Network, told Al Jazeera.

Previous presidents, notably Yoon’s predecessor Moon Jae-in, made statements about reducing the power of Samsung and other corporations, but eventually acceded to their primacy in South Korean business.

“Korean leaders made many attempts to diminish their power or dismantle conglomerates, but they all failed because they were so integral to the economy,” Cain said. “Their vertical integration means they control the entire supply chain, from raw materials to chips, ships and finished products.”

“Chaebols may engage in corruption and abuse of power,” he added, “but they are stable, strong and can withstand economic shocks.”

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