South Korea Tries to Rein in Its Corporate Elite

Even before South Korean prosecutors tied the chaebol to the influence-peddling scandal that culminated with the Dec. 9 impeachment of President Park Geun-hye, 2016 was a year to forget for the conglomerates that dominate the economy. The country’s biggest container line, Hanjin Shipping, filed for bankruptcy protection in August, stranding an estimated $14 billion of goods at sea. The top automaker, Hyundai Motor, suffered 3 trillion won ($2.6 billion) in lost production from labor disputes, including a three-week wage strike in September and October. Prosecutors in October indicted five members of retail giant Lotte Group’s founding family, including Chairman Shin Dong-bin, on charges including tax evasion and embezzlement. In the most embarrassing setback, mighty Samsung Electronics in October killed its Note 7 smartphone after the handsets kept exploding or catching fire. Samsung says the debacle will cost Korea’s premier chaebol more than $5 billion.

Then came the news about chaebol favors for Park confidante Choi Soon-sil, including tens of millions of dollars in donations to her foundations. On Dec. 6 lawmakers summoned the heads of nine conglomerates to testify about alleged corruption among the political and business elite. None of the nine groups has been charged with wrongdoing. The testimony has released the pent-up anger of a population struggling with the transition to a slow-growth era.