Koreans had elected a left-wing president, Moon Jae-in, who pledged to
clean up corporate corruption. President Moon appointed a prominent
economics professor at Hansung University in Seoul, Kim Sang-jo, to head
South Korea’s corporate watchdog, the Korea Fair Trade Commission
(KFTC).
The KFTC was Korea’s trustbuster, a regulatory agency that targeted
monopolies, opened investigations, and broke up cross-shareholdings and
cartels. It had the power to fine companies and order corrective measures.
Kim was both respected and notorious, known to Koreans as the
chaebol sniper for his fearless targeting of Samsung and other powerful
firms as a corporate governance activist. In 2004, he heckled Samsung at a
shareholder meeting for not doing anything when Chairman Lee II was
accused of making illegal political donations—and rankled Samsung so
much that its security guards dragged him out of the meeting.
“They were born as if they were princes in a kingdom,” Kim told the
Nikkei Asian Review about the next generation of business leaders, which
included Jay Lee. They “have lost the aggressive entrepreneurship that was
shown by the generations of their founding grandfathers and fathers.”
Whether the government had the willpower to dig in against the chaebol
or would dole out minor regulatory slaps, was the big test. “While there’s no
change in our belief that cross-shareholding is a serious problem, we have
to weigh benefits and administrative costs of any such reform,” Kim also
told reporters, tempering expectations. “We have limited capital to push for
policy changes and it is important to set priorities.”
In February 2018, Jay had already served one year of his five-year
sentence when he, his former aide G.S. Choi, and another former Samsung
executive, Chang Choong-ki, entered the Seoul High Court for the verdict
of their appeal, as they proclaimed their innocence of offering millions of
dollars and a race horse as a bribe for political favors and sought to get their
sentences overturned.
The appeal trial was a relatively quiet affair. The panel of judges
maintained that Jay Lee bribed President Park by supporting the equestrian
career of the daughter of the former president’s friend. But Lee’s
involvement was “passive compliance to political power,” one judge wrote.
The court reduced the amount of the bribes Jay Lee was charged with
having offered from $6.4 million to $3.3 million.
“[Former President] Park threatened Samsung Electronics executives,”