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(EDITORIAL from The Korea Times on June 14)

All News 07:08 June 14, 2016

Fixing chaebol (I)
-Lotte scandal shows overhaul can't wait-

Korea Inc. is living through deja vu again over the expanding investigation into Lotte Group's suspected slush fund. Stopping this kind of event from recurring is the key to overcoming challenges that have proven to be a slippery slope for the nation, stuck in the limitations of being an emerging economy as it is.

First, it is a typical case of a chaebol corruption. At stake is about 300 billion won or about $260 million allegedly stashed away by its Chairman Shin Dong-bin. Shin has dethroned his father Shin Kyuk-ho, founder of the conglomerate that started as a candy maker, by accusing his father of senility, while sidelining his elder brother Shin Dong-joo in a power struggle.

This soap opera struggle has eclipsed other allegations about insider trading, tax embezzlement and influence peddling within the group, which are, in a way, inevitable for any business that is mostly family owned.

Secondly, political motivations are hard to dismiss. Lotte blossomed under the previous administration led by Lee Myung-bak. The Lotte World Tower, the 123-floor, 555-meter high building, got its go-ahead from his government, which ignored opposition for the tall building compromising the effectiveness of a nearby airbase that serves as the fast responder to a North Korean attack. Then, Lotte acquired a lucrative license to make and sell beer.

Now it is strongly suggested that the current Park Geun-hye government is out to settle old scores with her predecessor and regain some of her lost popularity by conducting an anti-corruption campaign against the chaebol.

Thirdly, the case began as prosecutors, often derided as the maids of power, came under fire for sticking to the old corrupt system of giving favors to retired prosecutors who turn to private practice. In the latest case, Hong Man-pyo, a former star prosecutor, has allegedly intervened to gain favorable verdicts for his clients for astronomical fees.

More surprisingly, Hong, now a lawyer, operates a chain of hundreds of "officetels" ― small apartments, which are estimated to be worth tens of billions of won. Also damaging the prosecution's credibility are the cases involving a female prosecutor-turned-lawyer, who allegedly swindled a big name client for an under-the-table contract for big fees, or another who had to resign over illegal stock trading for big capital gains involving the owner of a leading online game maker.

Put the three factors together and the likelihood, if conventional wisdom serves as any guide, is that Lotte's Shin gets away with a little public embarrassment and a sizable but affordable fine; the current government gets an uptick in its sagging popularity or a timely distraction from the public beef about its competency; and the prosecutors feel good about thinking they have regained public trust, seeing their troubled colleagues get off the hook.

The parties involved ― the chaebol, the regime and the prosecutors ― would be happy to see things get back to business as usual. People play the usual role of suckers thanks to their short memories. But this game of Russian roulette can't continue. Perhaps, the next time it is played, it would be a loaded chamber and pulling the trigger means the end of Korea Inc.
(END)

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