South Korea’s Chaebol

The story of South Korea’s transformation from economic minnow to one of the world’s largest exporters owes much to its sprawling, family-run conglomerates. Known as chaebol, these long-time pillars of the nation’s “miracle economy” include the likes of LG, Hyundai, SK, Lotte and — largest of them all — Samsung. Yet the chaebol’s oversized influence and cozy relationship with government, highlighted by an influence-peddling scandal that cost the country’s president and Samsung’s top executive their jobs, have cast an intense spotlight on the web-like conglomerates as many have been struggling with generational transitions. Is it finally time for change at the chaebol?

2017 was supposed to be a watershed year for chaebol after Samsung’s top executive was jailed as part of the scandal that toppled Park Geun-hye, South Korea’s president. Jay Y. Lee, the de facto head of Samsung Group, was sentenced to five years after a court convicted him of bribing his way to greater control of the Samsung empire his family founded. But Lee appealed the conviction and in early 2018 the Seoul High Court freed him after reducing and suspending the sentence, sparking public anger. (South Korea’s highest court in August 2019 ordered retrials for Lee and Park.) In the past, business leaders, including Lee’s father, were convicted for corrupt behavior only to be let off. Lee — who went back to Samsung Electronics as co-vice chairman after his release — was accused of playing a role in payments of tens of millions of dollars that Samsung made to benefit a close friend of deposed president Park. The Lotte retail group’s chairman was convicted in 2018 in another trial relating to Park and handed a 30-month jail term. Eight months later, an appeals court freed him. Public discontent with chaebol has been brewing. At a hearing in 2016, nine chaebol leaders seated together faced a barrage of questions from lawmakers, as hundreds of thousands of protesters calling for the president’s ouster vented their anger at the conglomerates. Park was found guilty in 2018 of crimes ranging from bribery to coercion, abuse of power and the leaking of state secrets and sentenced to 24 years in prison, where she remains.