Hyundai chief's jail term brave bid to break mould

PUBLISHED : Tuesday, 06 February, 2007, 12:00am
UPDATED : Tuesday, 06 February, 2007, 12:00am


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The judge who yesterday sentenced one of South Korea's most powerful businessmen, Hyundai Motor chairman Chung Mong-koo, to three years in jail for corruption has to be applauded. In ignoring arguments from the business community that a prison term would harm the country's biggest vehicle maker, and as a consequence the national economy, he has sent a clear message that the law must always take precedence, no matter how influential the person involved may be.

Corporate protection has generally gone ahead of a concerted effort to apply justice in South Korea, where conglomerates, known as chaebol, have driven economic growth. Chung was expected to be given a suspended sentence, as has previously been the case for other business leaders found guilty of wrongdoing.

To South Korean corporate thinking, the idea is straightforward: that no matter what the crime, the head of an important firm should be allowed to stay out of prison so that the day-to-day running of the company can continue unhindered. In the case of Hyundai, which accounts for 70 per cent of South Korea's vehicle market and 5.4 per cent of gross domestic product, the arguments were put with more than the usual justification. Such an approach may in the short term be good for chaebol profits, investors, employment and the economy, but its consequences are obvious: a corrupt system.

Business leaders have been encouraged to be corrupt through believing that the worst punishment they will receive will be a suspended jail sentence. This sense has permeated through society to government. Chung, for example, thought that he could win favours by bribing politicians and other top officials through the slush fund he had set up.

South Korea, a democracy with the world's 11th biggest economy, should not have a corrupt business system, but the reality is that it does. Chung's sentence is a brave effort to break the mould.

There can be no alternative than for the nation to accept the pain of such rulings in the interest of greater transparency, a clean economy and adherence to the rule of law. Simply because someone is important does not give them the right to be above the law.

Chung has proven a good manager for Hyundai, but he is not irreplaceable. His actions will affect his company's financial performance and may even hit South Korea's economy. Those details are irrelevant in light of his crime.

South Korea has made much progress in the two decades since democratisation. But the country has failed to adequately tackle corruption and, as Chung's offences demonstrate, it still has a long way to go. Further effort is needed to put in place a cleaner, fairer and more transparent system under which those who commit such crimes are brought to justice, no matter how rich and powerful they may be.