[Outlook]Judge’s ruling on Hyundai bossSending Chung Mong-koo to prison is not necessarily the best solution. This is what Judge Lee Jae-hong at the Seoul High Court said after he issued a verdict keeping the chairman of Hyundai Motor Group out of prison. This is an exceptional remark from a judge whose job is to punish guilty people, that is, to send criminals to prison.
Judge Lee upheld the lower court’s conviction but decided not to send him to prison. Lee instead ordered Chung to make a contribution of 840 billion won ($900 million) and to lecture law-abiding managers as a form of social service. The judge added that Chung must pay for his wrongdoings in a more substantial way.
Wrapping up the trial in which he must have had a hard time deciding, Judge Lee said he would take responsibility if the ruling is criticized for being too weak.
In fact, the People’s Solidarity for Participatory Democracy criticized the judiciary custom in which a chairman of a conglomerate can be spared a prison term, no matter how grave his crime may be.
Should the ruling that ordered Chung to pay a substantial price, instead of imprisonment, be criticized as a lenient punishment to conglomerates?
I believe there are more people who welcomed the verdict than those who condemned it. Even though certain views on conglomerates or chairmen of conglomerates must have come into play to some extent, this ruling does not lack justice or fairness.
It is wrong to save a chairman of a conglomerate a prison term just because he is in that position. But it is even more wrong to think that a chairman of a conglomerate must go to jail only because he is the chairman of a conglomerate. Anti-jaebol sentiment might ruin not only the conglomerates in question but also the entire economy of Korea.
Around the same time as the ruling for Chung was issued, HSBC announced it would buy a controlling stake in Korea Exchange Bank on certain conditions. The HSBC announcement shows clearly what we lose from our anti-jaebol sentiment. According to the announcement, HSBC will buy about a 51 percent stake in the Korean bank from Lone Star Funds for about 6 trillion won.
Lone Star will make a huge profit if the trial on the suspicion around the foreign fund’s purchase of the Korean bank is over in due time and the government approves the deal. When Lone Star bought Korea Exchange Bank years ago, it paid 2.154 trillion won. Since then, Lone Star earned 1.546 trillion won through selling the stake or dividends. If it sells the rest of the stake, it will earn around 7.55 trillion won. The foreign fund will then make more than 5.4 trillion won in total, so it made 250 percent profit from the original investment.
To Lone Star, this profit is the reward for taking risk and having invested in a Korean bank which was in bad shape back in 2003. But domestic Korean banks and companies are left feeling envious now. For instance, Kookmin Bank signed the deal to take over Korea Exchange Bank last year, but backed off as suspicion erupted that Korea Exchange Bank’s value was manipulated when sold to Lone Star. Thanks to this, Lone Star can earn an additional 1.4 billion won now from the sell-off to HSBC. As a result, the money that Kookmin Bank could have made is now headed to Lone Star.
Because the Korean government has a policy to separate industrial capital from financial capital, Korean companies can’t do anything but watch.
With globalization the only way for the Korean economy to survive, foreign investment is very welcome, whether it be Lone Star or HSBC. However, it is wrong when domestic companies or domestic capital are discriminated against.
In this regard, the verdict on a trial on an appeal case of Hanwha Chairman Kim Seung-yeon, which will be released on Sept. 11, is drawing people’s attention. He was arrested four months ago, on May 11, on charges of beating employees of a bar as revenge for their beating of Kim’s son.
He admitted his wrongdoings and reached a deal with the victims, but he was sentenced to imprisonment at the first trial. The court said it reached the verdict because he misused his position as chairman for personal revenge and showed a disrespectful attitude toward the law.
In assault cases, if agreements are made between the wrongdoer and the victim, the former usually is spared imprisonment.
But Kim was sentenced to a heavier punishment than usual probably because he is a chairman of a conglomerate.
Will the judge presiding over Kim’s case say the same as Judge Lee said about Chung’s case? “Sending one to prison is not necessarily the best resolution.”
*The writer is the senior business editor of the JoongAng Ilbo.
by Sohn Byoung-soo