Samsung’s pardon exposes Koreans’ feelings of love and hate for tycoons | Business and economy

Seoul, South Korea – When US President Joe Biden visited South Korea in May, his first stop was Samsung Electronics’ massive semiconductor plant south of Seoul.

Biden’s tour guide was Lee Jae-yong, the de facto leader of Samsung, South Korea’s largest conglomerate, which has ramped up chip production in recent years to maintain an edge in a fiercely competitive sector.

The optics of the visit were key for Lee, who like many South Korean business magnates has a troubled past. The appearance with Biden was part of the process of rehabilitating Lee’s image after the criminal conviction, analysts said.

The process culminated in South Korean President Yoon Suk-yeol on Friday naming Lee among those receiving a presidential pardon on Liberation Day, which marks the end of the 1910-1945 Japanese occupation of Korea.

Lee’s appearance at the plant and the optics of the US president favoring Samsung technology “have reduced public anger at Samsung by highlighting its top-notch technology and global market dominance,” Kim Sei-Wan, an economics professor at Ewha Women’s University in Seoul, told Al Jazeera.

Lee’s pardon was not unexpected. Presidents typically grant pardons on the holiday, which falls on Monday, and in previous years business leaders found guilty of corruption or unfair business practices have been among those pardoned. Lee’s late father, former Samsung chairman Lee Kun-hee, received two presidential pardons.

This year’s list of pardons included other high-profile businessmen such as Kang Duk-soo, former chairman of shipping and trading conglomerate STX Group, and Chang Sa-joo, chairman of Dongkuk Steel Mill Co.

South Korean President Yoon Suk-yeol expressed hope that the latest round of pardons will help the country overcome economic difficulties [File: SeongJoon Cho/Bloomberg]

Ahead of Friday’s official announcement, Yoon, the standard-bearer of the conservative People’s Power Party, said he hoped the pardon would be “an opportunity for all our people to come together and overcome the economic crisis” caused by COVID-19. 19 pandemic.

In 2017, Samsung’s Lee was sentenced to five years in prison after being found guilty of bribing Park Geun-hye, then president, in a massive corruption scandal that rocked the country and led to Park’s ouster.

Lee spent 19 months in prison before being released last year. The pardon is significant because it removes any restrictions on what role Lee can play in the company and could pave the way for him to officially take over as chairman of Samsung Group.

Samsung has tentacles that extend across South Korea’s economy and is the largest employer, prompting many in the country to view it not just as another company, but as something of a national icon.

It is the world’s leading memory chip maker and is working hard to compete with semiconductor leader Taiwan Semiconductor Manufacturing Co in the foundry sector.

“Positive impact on the economy”

Supporters of Lee’s pardon hailed the decision as due recognition of Samsung’s role as a key player in the global competition for chip supremacy and the industry’s importance to South Korea’s export-oriented economy.

“Since Samsung’s core businesses, such as semiconductor manufacturing, require huge and risky investments, timely decisions by top management are essential,” said Kim, a professor. “In this regard, a pardon can have a positive effect on the economy.”

In a July poll conducted by current affairs magazine Sisain, 69 percent of respondents said they would support Lee’s pardon.

Sisein attributed the strong support for the pardon to the public perception that Lee, as the leader of the country’s flagship company, is contributing to the economy.

When Samsung patriarch Lee Kun-hee received his second presidential pardon in 2009 after being accused of embezzlement and tax evasion, then-President Lee Myung-bak justified the decision as necessary to allow the businessman to participate in South Korea’s bid to host the 2018 Winter Olympics year

Former president Lee, who is not related to the Samsung family, was himself later jailed on corruption charges and was an unsuccessful candidate for the latest round of pardons.

Samsung logo on a glass display case.
Samsung is the largest employer in South Korea, so many in the country see the company as something of a national icon [File: Jo Yong-Hak/Reuters]

For detractors, Samsung’s continued ability to evade responsibility for serious crimes sends a dangerous message to the leaders of the conglomerates that dominate the economy.

“The pardons really weaken the rule of law, and they really give the impression that conglomerate leaders are outside the law,” Jan Junseok, an economics professor at Catholic University, told Al Jazeera.

One Samsung Electronics workers’ association issued a statement condemning the pardon on the grounds that Lee’s pardon represents tacit support for the company’s anti-union stance.

“Lee Jae-yeon’s pardon marks the end of Samsung’s whitewashing strategy, which removes punishment for the guilty,” the group said in a statement.

With Lee now a free man, South Koreans are waiting to see if there will be economic returns. In a statement on Friday, Lee said he would respect the attention shown by the government and the public and “contribute to the economy through continued investment and job creation.”

Yang said that at least in the short term, Lee would take steps that would give the impression of stimulating South Korea’s economy.

“Lee will either morally or feel obligated to do something that can improve the economic situation, so he may have to continue the investment that Samsung promised,” Yang said.

A bridge flooded by heavy rain last day on the Han River in Seoul, South Korea, on August 9, 2022.
South Korean President Yoon Suk-yeol’s popularity has plummeted amid a series of problems, including floods that have killed more than a dozen [File: Reuters]

By pardoning Lee, Yoon, a career prosecutor, may have been trying to create positive economic momentum, however modest. Just three months into his term, Yun’s administration was plagued by scandals and setbacks. Earlier this month, his approval rating fell to 29 percent, down from 44 percent in June.

After taking office with no prior political experience, Yun’s early performance confirmed concerns among some critics that he was unprepared for the country’s highest office.

His pick for education minister recently resigned after announcing a policy to lower the school starting age by one year caused a sustained backlash, and this week he publicly apologized after torrential rains in Seoul caused widespread flooding that led to more than a dozen deaths.

Despite the general pressure, Yoon is unlikely to catch too much criticism for his decision to pardon the Samsung scion, analysts said.

“Lee’s pardon is in keeping with South Korean business tradition,” Geoffrey Kane, author of Samsung Rising and Lincoln Network’s senior fellow for critical new technologies, told Al Jazeera.

Previous presidents, including Yun’s predecessor Moon Jae-in, have made statements about reducing the power of Samsung and other corporations, but ultimately settled for their primacy in South Korean business.

“Korean leaders have made many attempts to reduce their power or break up conglomerates, but they have all failed because they were an integral part of the economy,” Kane said. “Their vertical integration means they control the entire supply chain from raw materials to finished chips, ships and products.”

“The chaebol may engage in corruption and abuse of power,” he added, “but they are stable, strong and able to withstand economic shocks.”

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