Samsung pardon reveals Koreans’ love-hate feelings for tycoons | Business and Economics

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

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

The optics of the visit were key for Lee, who, like many South Korean business tycoons, has a controversial past. The appearance with Biden was part of a process to rehabilitate Lee’s image after a criminal conviction, analysts say.

The process culminated in South Korean President Yoon Suk-yeol on Friday naming Lee among the recipients of a presidential pardon on Liberation Day, which marks the end of the 1910-45 Japanese occupation of Korea.

Lee’s appearance at the factory and the optics of a U.S. president who prioritizes Samsung technology “reduced public anger toward Samsung by highlighting its top-notch technology and global market dominance,” Kim Sei-wan, an economics professor at Ewha Seoul Women’s University, told Al Jazeera.

Lee’s pardon was not unexpected. Presidents typically grant pardons for 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 president Lee Kun-hee, received presidential pardons twice.

This year’s list of those pardoned includes other high-profile business figures such as Kang Duk-soo, former chairman of ship trading and maintenance conglomerate STX Group, and Chang Sae-joo, chairman of Dongkuk Steel Mill Co.

South Korean President Yoon Suk-yeol says he hopes the latest round of pardons for people with criminal convictions will help the country overcome its economic woes [File: SeongJoon Cho/Bloomberg]

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

Samsung’s Lee was sentenced to five years in prison in 2017 after being convicted of bribing Park Geun-hye, then the president, as part of a widening corruption scandal that rocked the country and led to Park’s removal from office.

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

Samsung has tentacles that extend throughout South Korea’s economy and is the largest employer, leading many in the country to see it as more than just another company, but something of a national icon.

It is the world’s top 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 race for chip supremacy and of the industry’s importance to South Korea’s export-oriented economy.

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

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

Sissein attributed the strong support for the pardon to the public perception that, as the leader of the nation’s top company, Lee was contributing to the economy.

When Samsung patriarch Lee Kun-hee received his second presidential pardon in 2009 after convictions for 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 for hosting the 2018 Winter Olympics.

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

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

For detractors, Samsung’s continued ability to avoid 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 make conglomerate leaders look like they are outside the law,” Yang Junseok, an economics professor at Catholic University, told Al Jazeera.

A Samsung Electronics workers’ association released a statement condemning the pardon on the grounds that Lee’s pardon amounted to tacit approval of the company’s anti-union stance.

“What Lee Jae-yong’s pardon symbolizes is the completion of Samsung’s whitewashing strategy, which reverses the punishment of those responsible,” the group said in a statement.

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

Yang said that at least in the short term, Lee will take steps that appear to stimulate South Korea’s economy.

“Lee will either be moral or feel obligated to do something that can improve the economic situation, so he may have to go ahead with the investments that Samsung has promised,” Yang said.

A bridge is submerged by heavy rain from the previous day on the Han River in Seoul, South Korea, August 9, 2022.
South Korean President Yoon Suk-yeol’s popularity has fallen amid a series of challenges, including floods that have led to more than a dozen deaths [File: Reuters]

By pardoning Lee, Yoon, a career prosecutor, may have been trying to create a positive economic boost, however moderate. Just three months into his term, Yun’s administration has been plagued by scandals and mishaps. At the start of this month, his approval rating fell to 29 percent, down from 44 percent in June.

Having taken office with no previous political experience, Yun’s early performance has confirmed concerns from some critics that he was unprepared for the country’s highest office.

His choice for education minister recently resigned after announcing a policy to lower the school starting age by one year sparked a prolonged backlash, and this week he issued a public apology after heavy rains in Seoul caused massive flooding that led to more than a dozen deaths.

While facing general pressure, Yun is unlikely to face too much criticism for his decision to pardon Samsung’s offspring, analysts say.

“Lee’s pardon is in line with South Korean business tradition,” Jeffrey Cain, author of “Samsung Rising” and senior fellow for critical emerging technologies at the Lincoln Network, told Al Jazeera.

Previous presidents, notably Yoon’s predecessor Moon Jae-in, made statements about reducing the power of Samsung and other corporations, but ultimately acquiesced to their primacy in South Korean business.

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

“The chaebols may be involved in corruption and abuse of power,” he added, “but they are stable, strong and can withstand economic shocks.”

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