Thursday, December 13, 2012

SOUTH KOREAN CHAEBOLS: FRADULENT ACTS


They ignored the potential of ‘Clean capitalism’ ; they were wrong...

And so were the thieves caught, one after another. In 2000, the much discussed multi-billion Chaebol-cheat Daewoo, collapsed! Getting cheap credits from banks was never an issue, and Daewoo used this to snap up companies… [It’s not very known that founder & former CEO of Daewoo, Kim Woo-choong’s father had been dictator Park Chung Hee’s teacher.] The company cut several secret deals with the government to bail out his shipbuilding unit and it is also believed that during 1997-98, Kim masterminded Asia’s biggest accounting fraud that inflated Daewoo’s stock by $32 billion! Ultimately, post-Daewoo, he fled... 

Three years later, another Chaebol, SK Global’s accounting scandal erupted! SK Global, the sister firm of South Korea’s largest oil refiner, SK Corp, was involved in two cases – one, an accounting fraud (profits of FY 2001 were inflated by $1.25 billion), and two, for funnelling funds during the 2002 presidential elections. Weeks later, SK Corp’s Chairman Chey Tae-won – the eldest son of the group’s founding family and son-in-law of a former President of South Korea – was sentenced to 3 years in prison. 

After a break of 3 more years, more worms wriggled out of the can… and this time, it was Chung Mong-koo, Chairman of South Korea’s largest automaker, Hyundai Motor Co., who was arrested on charges of embezzling company funds to create a $105 million slush fund in order to clandestinely bribe government officials. [Did you know that the current South Korean President, Lee Myung-bak, had worked in Hyundai for 27 years and was its Chairman & CEO when he quit to enter politics?]. February 2008 saw more action in this regard – only this time it was the turn of the largest Chaebol, Samsung Electronics. Chairman Lee Kun-hee, alongwith his son, Lee Jae-yong resigned amidst allegations of financial irregularities and charges of hiding slush funds (a whopping $4.5 billion, used to bribe government officials). On July 26, 2008, Lee Kun was fined $109 million & sentenced to 3 years of suspended jail term… 


 Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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