No more owner-risk, pleaseBusiness tycoons no longer have legal immunity from corruption and wrongdoing regardless of their “contributions to the national economy.” The general feeling is that chaebol owners must face the same yardstick and punishment on illegality as any other person.
The Seoul High Court handed a three-year prison term with five years of probation to Kim Seung-youn, the chairman of Hanwha Group, for causing the group to lose millions of dollars through illegal financial bailouts and subsidies to ailing subsidiaries. Koo Cha-won, the chairman of LIG Group, received the same sentence for ordering the issue of fraudulent commercial papers. After the recent court decisions, many questioned whether the three-year jail term and five-year probation could be established as the court’s new guideline in punishing business tycoons.
After Kim was arrested and sent directly to prison after his first trial in August 2012, many outside and inside business circles came to sense a no-tolerance policy for chaebol owners. Instead of their rank and contributions to society, the courts emphasized the duty of leaders of large business groups to demonstrate responsibility in society. Suddenly, all businessmen faced the potential of breaking the law over bad business judgments after the offense of malfeasance was applied to most corporate prosecutions and investigations.
The Seoul High Court judge concluded that the money had not been used for personal greed or interests, and also took into account the tycoons’ contributions to the economy. The latest court decision may lift some of the heavy air from corporate management offices.
The court makes judgments on a case-by-case basis and decides on criminal accountability. If an entrepreneur abuses the company’s assets and uses company money for his or her own interests, he or she must be severely punished. The judge told Hanwha’s Kim that a large business conglomerate has the duty to obey the law in order to uphold responsibility befitting to its rank in society and run the business according to transparent and normal rules. The probation, however, should not send the wrong message that chaebols can easily escape punishment for wrongdoing.
Obeying the law and regulations should be the basic rule in corporate management. Companies must endeavor to build trust so that the so-called owner-risk does not undermine Korean corporate names and activities.
JoongAng Ilbo, Feb. 12, Page 34