Thursday, April 20, 2006

Atonement by Korean Big Business

Recently a number of Korea's top Groups under attack by the government prosecutors have offered huge atonement to society.

Many westerners find this norm unusual and of concerning. This Korea Herald editorial, although with a political slant, highlights and explores the practice.

On Jan. 4 this year, President Roh Moo-hyun went to a banquet hall to exchange New Year's greetings with business leaders. Speaking of his wish to address the problem of bipolarization, he told the executives that he may have to ask them to help him. Many took the president's remarks as pressuring big corporations to donate money to help the poor.

Now Roh may feel happy because one conglomerate after another is offering a huge sum of money as a "social contribution." It's amazing that even a U.S. private equity fund has joined what seems to have become a trend. But anyone with sensible judgment should not welcome this development, because all the donations seem to have been made with "impure" motives. They could be seen as attempts by the donors to seek favor in political circles, appealing for leniency from law-enforcement authorities, or easing public criticism triggered by a corruption investigation.

The Hyundai Automotive Group's decision to donate 1 trillion won to a social welfare fund has made the prosecution and the public feel uncomfortable. The announcement was made on Wednesday, just one day before Chung Eui-sun, president of Kia Motors, was to be questioned by prosecutors about his role in the widening corruption probe into the auto giant.

Two and a half hours after Hyundai's announcement, the chairman of the U.S. investment fund Lone Star held a press conference in which he confirmed the donation of 100 billion won. The U.S. fund is being investigated by prosecutors and other government agencies over alleged tax and currency irregularities and the acquisition of Korea Exchange Bank in 2003.

The Hyundai and Lone Star announcements followed a similar one made in February by Samsung Group, in which it committed 800 billion won. Samsung was the target of an investigation into alleged donations of illegal political funds and the illegal transfer of wealth from its chairman, Lee Kun-hee, to his son.

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