Chaebol Nutcase: Welcome to a Feudal Aristocracy of the Orient

Once upon a time, in a faraway land called South Korea, Heather was working at her father’s airline company as a high-powered executive.

One winter’s day, Heather went on a trip to America, where a flight attendant on her company-owned jet offered her a bag of macadamia nuts in their original packaging, instead of a bowl. Incensed by the manner in which the nuts were offered to her, Heather lashed out at the flight attendant, and started hurling invectives at the first-class cabin crew.

The head steward tried to mollify her, for there did not appear to be anything remiss with the service. But Heather rebuffed the gesture, allegedly hitting him with a file binder and making him kneel in humiliation before finally expelling him from the already-taxiing aircraft.

When she returned to South Korea, the country was up in arms, enraged by a chaebol heiress whose actions seemed to illustrate how too much power in the hands of a few could lead to abuse and crime.

Like a fairytale, the story of Cho Hyun-ah, a.k.a. Heather Cho, the vice-president of in-flight service at Korean Air and a daughter of the company chairman, has a fitting ending for the villain. Along with another executive at the company, Cho has been arrested, not only for what happened on the flight but also for what the company tried to do to distort the truth, using connections inside the Ministry of Land, Infrastructure, and Transport.

Yet contemporary South Korea is no mythical kingdom where evil is always punished and justice prevails. It is more like a feudal aristocracy if we are to go by the obsequiousness this country’s political elite shows towards the powerful chaebol: family-owned and run conglomerates like the Hanjin Group which includes Korean Air and is controlled by Cho Hyun-ah’s family.

South Koreans woke up on Christmas Day to the news of a heartwarming tribute to chaebol from the ruling Saenuri Party. Its chairman, Kim Moo-sung, is now urging, with the support of Finance Minister Choi Kyung-hwan, paroles and pardons for convicted chaebol CEOs currently behind bars as “a way of overcoming the economic crisis” ostensibly gripping South Korea.

Nobody understands what “economic crisis” suddenly plagues this country with the 13th-largest economy in the world and a projected growth rate of 3.5 percent in 2014, much less why chaebol criminals deserve even more kid-glove treatment than usual.

But the message is clear: chaebol are not only rich; they are subject to different rules and their power remains undiluted despite the damage Cho Hyun-ah has inflicted on the image of the chaebol collective.

South Koreans are used to seeing the government dole out special treatment for the all-powerful chaebol. Only five years ago Samsung Chairman Lee Kun-hee received a presidential pardon for his tax evasion conviction on the grounds that he was “vital to helping win the Winter Olympics for the city of Pyeongchang.”

Even Hanhwa Group Chairman Kim Seung-youn, who won notoriety in 2007 after deploying private security to assault night-club staff who had hit his son and then trying to cover up the crime by bribing the highest echelon of the police, got away with a suspended sentence and community service.

(Kim was convicted again in 2014 on breach of trust for illegally diverting funds within his business empire. But he served no time after an appeals court judge suspended his sentence due to “his contributions to South Korea’s economic development and his poor health.”)

Some names are already being floated as likely candidates for clemency under the current administration. They include Chey Tae-won, the chairman of the SK group (who already received one pardon in 2008 on a different conviction); his brother and the group vice-chairman, Choi Jae-won; and Lee Jae-hyun, the chairman of the CJ Group, which wields unchallenged power over South Korea’s entertainment industry. All three are in prison for financial crimes committed during their tenure as chaebol heads.

Given that South Korea ranks 43rd out of 175 countries on Transparency International’s Corruption Perceptions Index, one should not expect upholding public trust to be the priority of the political class in Seoul. And much as the U.S. financial authorities have provided Wall Street banks with special dispensations under the rationale that the latter are “too big to fail”, the South Korean government has shown little to no interest in scrutinizing chaebol, lest even a distant gaze somehow harm these mighty empires and by extension — the official rhetoric goes — the national economy.

Yet the argument that South Korea’s economy will tank without chaebol chiefs commands less traction now, whether the political and economic elites pretend otherwise.

What the Korean Air saga illuminated was that Cho Hyun-ah and her two siblings were propelled into key management positions at the company by virtue of their ‘superior’ birth. Their business talent is yet to be proven; their conduct, however, is not one for praise. Hyun-ah’s brother, Vice President Cho Won-tae of Strategy and Operation at Korean Air, was investigated in 2005 over an allegation that he had physically assaulted a 70-year-old woman who protested his reckless driving.

Their sister Cho Hyun-min, the youngest corporate executive in South Korea at the age of 31, became a national laughing stock two years ago when she confronted a travel company CEO who had criticized via Twitter the flight attendant uniform at Jin Air, Korean Air’s low-cost sister carrier. She threatened, also on Twitter, a defamation suit in retaliation for the critical comment, misspelling the Korean word for defamation.

It was further disclosed but a few days ago that she had sent a text message to her sister at the height of the scandal, vowing “revenge” on unspecified individuals for the fate that befell Cho Hyun-ah and the family company.

The longstanding propaganda in South Korea that chaebol such as the Cho dynasty and various legally compromised CEOs should still be kept in charge of major enterprises is now laid bare for what it truly is: a move to ensure that the Republic of Korea in the 21st century remains an ancien régime where elite blood is the only criterion for power.

Take, for instance, the point made by Park Yong-man, the president of the Korean Chamber of Commerce (and himself a chaebol CEO, of the Doosan Group), who, according to the country’s largest daily Chosun Ilbo, said: “It is my sincere wish that [the government] reconsider whether it is right to leave [SK Chairman Chey in prison] in consideration of the future” [emphasis added].

This sentiment, shared by Saenuri Chairman Kim Moo-sung and the finance minister, telegraphs a dangerous view that the ability to run large corporations — and shape the nation’s future — is inextricably tied to blood and hereditary privileges. It strips away even the illusion of South Korea as a meritocracy and heralds, once and for all, that the rule of law does not operate in this country.

As long as this country remains a feudal aristocracy of the Saenuri Party’s imagination, it just may end up being Cho and her kind who have the last laugh.