The prosecution is seeking an arrest warrant on Hyundai Automotive Group chairman Chung Mong Koo and has decided to continue investigating his son, Chung Eui Seon, president of Kia Motors, without holding him under arrest. The courts have yet to issue judgment, but the arrest of the senior Chung means the investigation into what was really behind Hyundai Motor's slush funds has essentially come to a conclusion after close to a month of activity.
The decision to arrest Chung should be seen as confirmation of the prosecution's determination and principles about being strict with corporate crime. Chung embezzled well more than W100 billion and committed breach of confidence by incurring the company W300 billion in losses. Those are crimes that require a heavy sentence of at least five years in prison. Very little is known at this point about how the slush fund was spent, and Chung is denying some of the charges. Naturally, the court should be concerned about the potential for destruction of evidence, which is the basis for issuing an arrest warrant.
The prosecution is reported to have agonized until the very end about what to do with Chung and his son. One can understand if investigators were worried how their actions will influence the economy. However, you have to deal with crimes according to law and principles based on their seriousness, and weigh them against nothing that isn't the law. Just as investigation without arrest does not mean the accused is being excused, arrest does not necessarily lead to punishment. The reason the prosecution's decision to arrest him looks like a particularly strong move is because the legal system has usually been soft when it comes to the conglomerates. Prosecutors would investigate without making arrests for fear of hurting international confidence in Korea and the courts then would then "take circumstances into consideration" and let the accused go free.
The courts and the prosecution have on many occasion promised the people they are going to get strict with corporate crime, so they must not close this case having made only rough conclusions about each of the charges. Finding out how money from the slush funds were spent and whether Hyundai engaged in illegal "lobbying" is just the beginning. The illegality of involving affiliates in the process of handing over rights to the company and using public funds meant for restructuring to rid subsidiaries of their problems must be made clear as well. We hope to see this be the case that establishes strict and consistent principles for law enforcement when it comes to investigating and putting corporate crime on trial.
The calls for leniency on Chung speak of the power wielded by the people who have control over our economy. Hyundai has tried to soothe public opinion with the announcement it will give W1 trillion to charity, all while invoking talk of a crisis in the group so as to pressure the prosecution. Big business and the conservative media have responded in kind, with calls about being "realistic" about the economy. If we are to take them on their word, they are essentially saying that a conglomerate that has significantly contributed to the economy can be forgiven for its illegal activities for the sake of the national economy. The goal of increasing the frequency of investigation without arrest was to better respect the civil rights of weaker members of our society, and it was never intended to be a lawyer of protection to defend political and economic leaders when they commit crimes. It is embarrassing to see those who emphasized the need for keeping powerless workers and farmers legally accountable for their actions turn around and say that jaebeol executives should be investigated without being put under arrest.
Hyundai needs to turn this into an opportunity. There will of course be no small amount of immediate shock and confusion because of the vacuum in management. Conditions are not favorable either, in terms of the exchange rate and the price of oil. This investigation originated out of the corruption and other illegal activity of the Hyundai family that took place in the course of authoritarian management and the unreasonable lengths it took to hand over power to the next generation. The family should not be allowed to involve floor supervisors from its factories in calling for leniency, or to hide their irregularities with gifts to charity. If you look at this positively, this could be a good opportunity to move away from feudal styles of management that consider the company and the owning family to be much the same entity, and to transform corporate structures so that boards of directors engage in transparent decision making. If conglomerates are to grow to be truly competitive global businesses, agonizing over what needs to be changed and in what way should take priority over worrying about arresting jaebeol chairmen.
The Hankyoreh, 28 April 2006.
[Translations by Seoul Selection]
[Editorial] Law and Principles Answer To Conglomerate Corruption |
