The Peninsula

The Government Faces Pressure to Prosecute and Save Corporations

What Happened

• Samsung Vice Chairman Lee Jae-yong was sentenced to two and a half years in prison for the second time for bribing former President Park Geun-hye’s close advisor.
• While the court gave Lee a shorter sentence than average for the crime, 46% of the Koreans in a survey believed that the punishment was too harsh.
• Recently, the Seoul Central District Court also acquitted the former CEOs of SK Chemical and Aekyung Industrial who oversaw the distribution of a faulty humidifier sterilizer that is believed to have caused around 1,500 deaths.

Implications: Adverse economic conditions stemming from the COVID-19 pandemic creates an awkward environment for the Korean government’s effort to hold big corporations accountable for their wrongdoing. Public polling suggests that many people might be hostile to pursuing harsher criminal convictions for leaders of major corporations. This might be reflected in the court’s decision to sentence Samsung Vicechairman Lee to a subdued sentence despite the average prison sentence for embezzlement of funds over USD 4.5 million being 4 to 7 years. Former heads of SK Chemical and Aekyung Industrial were also recently exonerated in a case involving a lethal humidifier sterilizer which allegedly caused 7,103 injuries and over 1,500 deaths since the early 2000s.

Context: Context: Samsung accounts for about a quarter of the total market capitalization of Korea’s benchmark Kospi stock index. The group’s electronics unit, Samsung Electronics, alone makes up nearly one-fifth of the country’s total exports. Given the company’s dominant position in the economy, Samsung’s legal team has explicitly argued in court cases involving its alleged misbehavior that harm to its credibility or reputation would negatively impact the country as a whole.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of Sophie Joo. Picture from the flickr account of juan nuñez parilli