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During a state visit to India

On the afternoon of July 9, South Korean President Moon Jae-in, who is currently on a state visit to India, met Samsung Electronics Vice Chairman Lee Jae-yong at a ceremony marking the expansion of a Samsung mobile phone factory in Noida, near New Delhi.

Simply given the significance of the Noida factory, Moon and Lee’s meeting could be seen as natural. Samsung invested around 49.15 billion rupees (US$716.86 million) to expand the factory’s size from 120,000 to 240,000 square meters. The expansion increases its mobile phone production capacity from 67 million to 120 million phones a year. Once opened, it will be the world’s largest mobile phone factory.

Moon and Indian Prime Minister Narendra Modi reportedly decided to attend the ceremony because the Noida factory has become a symbol of strengthening economic cooperation between the two countries.

But the fact is that Moon’s meeting with Lee has provoked a number of interpretations that go beyond such economic significance. This is the first time that Moon has met Lee or attended an event organized by the Samsung Group, South Korea’s largest chaebol. On top of that, Lee was released from jail this past February after his sentence in the Choi Soon-sil influence-peddling scandal was suspended on appeal, and the case is currently pending review by the Supreme Court. Questions could be raised about whether it is appropriate for the president to meet the head of a chaebol whose trial is still underway.

Some segments of the business community are interpreting Moon and Lee’s meeting as signaling a pro-business shift in the government’s economic policy. Considering that Moon has hitherto kept his distance from business leaders tainted by controversy, his meeting with Lee – who was convicted of bribing the perpetrators of the influence-peddling scandal – is a major change, they say. But it is a stretch to conclude that this meeting will lead to an immediate change in the government’s policy foundation.

A distinction should be drawn between government support for a South Korean company that is increasing the national wealth through its overseas expansion and holding the owner of a chaebol strictly responsible for illegal behavior.

“It’s not as if the president can influence the trial, so it’s going too far to say that this gives Lee a get-out-of-jail-free card,” said a senior official at the Blue House. In other words, the official said, Samsung’s corporate activities and Lee’s trial are separate things.

There are obviously some things to watch out for. In previous governments, meetings between presidents and chaebol owners often fueled various rumors. In that sense, economic agencies such as the Fair Trade Commission and the Financial Services Commission must be sure they do not cause a misunderstanding by reversing their policy position without cause. Moon’s meeting with Lee must not be taken as an opportunity for undermining the principle of dealing sternly with corruption and illegal behavior at the chaebols.

Please direct comments or questions to [english@hani.co.kr]