LEX Thursday’s indictment of a top South Korean business chief following slush funds allegations looks bold. It suggests the country, which ranks poorly in world corruption league tables, is getting tough on what have traditionally been regarded as the normal costs of doing business. More impressively, it implies no one is immune: Lee Kun-hee heads up Samsung, Korea’s biggest chaebol and one that was at the forefront of the country’s industrialisation.
Or does it? Many were the colourful allegations that flew around – the slush fund was allegedly used to buy a Roy Lichtenstein painting and murky deals were employed to secure control of Samsung for the third generation of the Lee family. But Mr Lee was cleared of more serious bribery allegations and indicted only on more mundane charges of tax evasion and breach of trust. The probe was sparked by a whistleblower, not by auditors or government officials. And it is a rather limited investigation that alleges large gains from tax evasion but does not look into possible misuse of those funds.
Nor can it be viewed as a sign that the newly installed government is on a mission to eradicate corruption. Mr Lee’s indictment was facilitated by moves to hand greater independence to prosecutors and curb the power of the chaebol, both legacies of former governments. Under new president Lee Myung-bak some of these may be unwound. He wants to grant more freedom to the chaebol, including the ability to invest in banks – a practice that played a part in the financial crisis at the turn of the decade. Taking the real measure of Korea’s commitment to eliminating corruption will have to wait until the court ruling. Much depends on the punishment meted out to Mr Lee – if he is found guilty – and whether his family remains in control of Samsung. So far the evidence is not compelling.
