[Column] Can Yoon square his “pro-business” stance with his hard line on fairness?

Posted on : 2022-04-12 16:59 KST Modified on : 2022-04-12 16:59 KST
Prosecutors’ recent raids on Samsung are putting the business world on edge
President-elect Yoon Suk-yeol waves to supporters while visiting a market in Andong, North Gyeongsang Province, on April 11. (pool photo)
President-elect Yoon Suk-yeol waves to supporters while visiting a market in Andong, North Gyeongsang Province, on April 11. (pool photo)

Prosecutors recently conducted raids on Samsung Electronics and Welstory. This came nine months after the Fair Trade Commission issued a complaint and imposed 234.9 billion won in penalties in June 2021 over Samsung Electronics and others alleged funneling in-house cafeteria orders to Welstory.

The fact that the prosecutors are only now beginning their investigation just as President Yoon Suk-yeol prepares to take office — after they had been sitting on it for so long — is making some waves. Observers are raising the possibility that this was agreed upon ahead of time by Yoon and the prosecutors, or that the prosecutors are conducting an “on-message” investigation to reflect Yoon’s aims.

The situation has the South Korean business world very much on edge. Samsung — which already has an uncomfortable history with Yoon after he led the investigation into the Park Geun-hye administration’s influence-peddling scandal — is looking very nervous indeed.

“What can we say? All we can do is sit and stew as we watch the investigation unfold,” an executive fretted.

Shortly after the Park administration took office, prosecutors launched a surprise investigation in May 2013 targeting the group CJ Corp., which had gotten on the incoming president’s “bad side.” Chairperson Lee Jay-hyun ended up indicted on charges of tax evasion and operation of a slush fund in the hundreds of billions of won.

In addition to the illegal support allegations, prosecutors are also looking into connections with the process behind Samsung Electronics Vice Chairman Lee Jae-yong’s succession to his management role.

Samsung Electronics is accused of having funneled in-house cafeteria business to Welstory — a company controlled by members of the Lee family — amid the involvement of the group’s Future Strategy Office between 2013 and 2020. After Welstory reaped over 60 to 80 billion won a year in profits as a result, the Lee family then distributed dividends of nearly 400 billion won to the company’s majority shareholder, Samsung C&T. This raises the possibility of the situation spreading to Lee Jae-yong as the ultimate beneficiary of the illegal support.

Within the South Korean business world, many are complaining that the Samsung investigation conflicts with Yoon’s ostensibly “pro-business” orientation and could have a chilling effect on corporate operations.

Some business world observers are drawing parallels with the Lee Myung-bak administration, which sounded a similarly “business-friendly” note early on before suddenly changing course midway through its term to an emphasis on “shared growth” between large corporations and SMEs.

The move touched off a major outcry from the business world at the time, with many complaining that the Lee administration had “signaled right and then turned left.”

The dictionary definition of a “pro-business” administration is one that “is close with business or adopts policies that are favorable to business.” In his victory speech, Yoon drew distinctions between himself and outgoing President Moon Jae-in by emphasizing “privately-centered growth” and job creation. In a meeting with six major business associations, he responded to their demands to ease the terms of the Serious Accident Punishment Act, citing “practical difficulties” for workplaces.

But Yoon also made an election pledge emphasizing “restoring fairness and common sense.” During his campaign, he signaled his intent to “respond firmly to acts such as funneling that are detrimental to market fairness.”

As prosecutor general, he had placed particular emphasis on ensuring a “fair competitive order.” In his inaugural speech in that position, he declared, “The priority value in the enforcement of criminal law is the establishment of a fair competitive order.”

According to some sources, Yoon has also spoken in informal settings about South Korea’s major corporations — the chaebol — posing the greatest risk of damaging the competitive order. Yoon himself has argued that there is no contradiction in eliminating unnecessary and outdated regulations to ensure free business activities on the one hand, and sternly punishing corporations’ illegalities and infringements on the other.

Strictly speaking, “pro-business” is a rather unclear term. How much “anti-business” sentiment actually exists among the South Korean public, in the sense of people repudiating business per se?

If anything, the public is too favorable toward corporations. Whenever chaebols have been involved in corrupt or illegal activities, we rarely if ever see the kinds of plummeting stock prices or boycotts that occur in advanced economies. In effect, “pro-business” is a counterpart to “anti-business” — which is itself a fictitious ideology.

It’s also unclear what a “pro-business” policy orientation actually looks like. What sort of stance should the government take when large corporations abuse their power over SMEs? Should they sternly punish the corporations or ignore the smaller businesses’ plight?

When the business world argues that “anti-business” sentiments make it difficult for corporations to operate, this tends to just be an argument meant to paper over their illegal and corrupt actions and avoid punishment — a fact that even conservative administrations understand. The reason they continue talking about being “pro-business” in every election is so that they can use the issue to tar progressives as “communists.”

For 27 years, Yoon Suk-yeol worked as a prosecutor to ensure the rule of law, spending each day looking at the statue of Lady Justice with a sword in one hand and a scale in the other. Now he is looking to start his presidency holding two different banners that are not easily reconciled: the “pro-business” banner in one hand, and the “fairness” banner in the other. Can he succeed?

By Kwack Jung-soo, editorial writer

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

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