Debates on Korean Chaebol (Conglomerates), Chaebol Ethics

1. Korean Chaebol Ethics
Study on the issues of Chaebol companies in
Korea such as Samsung, LG, Daewoo, Hyundai, SK

2. Agenda
• Chaebol overview
• Ethical crisis of Chaebol leaders
• Chaebol’s controversial issues
• Government activities
• Conclusion

3. Chaebol overview
• Korean Chaebols are in various ways but what is
common in every definition is
– A big business conglomerate.
– Comprising a large number of diversified affiliate
companies.
– Controlled by an emperor -like owner chairman.
• In 2012 total sales of Korea’s 10 biggest
companies, like Samsung and Hyundai Motor,
was 946.1 trillion won (US$83.1 billion). This
accounted for 76.5% of Korea’s GDP (according to data
posted by the website www.chaebul.com )

4. Ethical Crisis of Chaebol Leaders (1)
• In 2007, Mr. Kim Seung-youn, chairman of
Hanwha. (beat bar workers at a building site with
the help of his own goons).
• In 2006, Mr. Chung Mong-koo, the chairman of
Hyundai. (was convicted of embezzling about
$90m from his company misappropriation of
corporate funds).
• Mr. Chey Tae-won, of SK Group. (was convicted in
2003 of illegal share swaps designed to keep the
most lucrative parts of the group in his family's
control).

5. Ethical Crisis of Chaebol Leaders (2)
• In 2008, Mr. Lee Kun-hee, the former
chairman of Samsung. (was convicted of
embezzlement and tax evasion).
• In 1999, Mr. Kim Woo Choong, founder of the
defunct Daewoo Group. (was convicted of
fraud and embezzlement).
• In 2013, Mr. Chey Tae-won, of SK Group was
found guilty of embezzling and was sentenced
to 4 years in prison by the Seoul District Court.

6. Ethical Crisis of Chaebol Leaders (3)
• In 2012, Hanwha Group Chairman, Mr. Kim
Seung Youn was sentenced to 4 years in jail
and fined 5.1 billion won ($4.5 million) for
embezzlement amid a presidential election
campaign that’s increasing scrutiny of South
Korean executives. (http://www.bloomberg.com/)

7. Chaebol’s controversial issues (1)
• In general debates:
– These Chaebols spend far more on advertising than
seems justified by the demands of brand promotion.
– Indirect cross-shareholding to control the tower of
management governance.
• The Chaebols were protected from:
– Competition.
– Assured access to capital.
– Held to low standards of disclosure.

8. Chaebol’s controversial issues (2)
• Domestic debates have been mostly focused
on the negative aspects of Chaebols:
– Excessive concentration
– The collusion between government and Chaebols
– The lack of transparency as ethical background
– Unfairness of owner -managers’ running the group
affiliates with small stakes
– Imbalance against SMEs.

9. Government activities & effects (1)
• In 2008, The President Lee Myung-bak pardoned many
Chaebols leaders.
• President Lee also appealed to Chaebols leaders to
boost investment and jobs.
• In 2009, President Lee Myung-bak pardoned Lee Kun-
hee.
• President Lee Myung-bak granted a special amnesty to
Mr. Lee Kun-hee:
– Retain the membership at the International Olympic
Committee.
– Lead a campaign by the South Korean city of PyeongChang
to host the 2018 Winter Olympics.

10. Government activities & effects (2)
• But South Koreans civilian feel:
– Increasingly angry about unequal justice.
– Pressured the courts and politicians to end the
cycle of light sentencing and pardons.
• People believe that too little of Chaebols’
growth is sharing down to the public and
SMEs.

11. But… In conclusion
• Is it really need a new policy for Chaebols? Is
the changing will bring only a good things?
• Many people feel proud of the
accomplishments of various Samsung
companies.
• Many others fear any harm to the
conglomerate (Chaebols) could lead to a
breakup that would open the door to foreign
companies and investors acquiring some units.

12. FAQ ?
Thanh you!