Play by the (reasonable) rulesA Seoul appeals court slapped relatively harsh verdicts on two SK Group chiefs: a four-year jail term for Chairman Chey Tae-won and three and a half years for his brother and Vice Chairman Chey Jae-won. The ruling underscores growing court intolerance toward corporate corruption and mismanagement.
The Seoul High Court upheld the lower court’s ruling on the 54-year-old chairman for embezzling 45.1 billion won (41.9 million) from two SK affiliates for personal investment. His younger brother, who had been acquitted in the lower court, was arrested at the court. It is the first time a sibling of a family-owned chaebol group was found guilty in the same court. The judge said he decided on the ruling because if chief executives of large business conglomerates neglect their social responsibility and transparent decision-making procedures - and instead abuse their status for self-interest - the economic order and foundation could be undermined.
The fate of the Chey brothers will be finalized by the Supreme Court. But the chain of rulings suggests sterner court guidelines on corporate crimes and misdeeds. Kim Seung-youn, chairman of Hanwha Group, was sentenced to three years in April. The Supreme Court last week ordered a review on his verdict, but it remains uncertain if he will get lighter sentence. Chairman of LIG Group Koo Cha-won and his son Koo Bon-sang, vice chairman of LIG Nex1, each received three years and eight years in prison, respectively, on charges of issuing fraudulent short-term bonds in order to raise funds. The court dismissed the defense argument that the chairman had not been involved in the bond issue or the businessmen’s pleas for a lighter verdict.
The judiciary should be prudent with its yardstick. If it interferes too extensively into management judgments that often require risk-taking, corporate investment and activities could be damped. The corporate sector also should draw a strict line between what is acceptable and not in governance. It must differentiate what capital belongs to the company and large shareholders or executives. The corporate sector should strive to obey by the rules and run management more transparently.
Our society now demands responsibility befitting to the power and wealth businessmen enjoy. The business sector should use the momentum to reinvent corporate management style and customs.