Chaebol Nutcase: Welcome to a Feudal Aristocracy of the Orient

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Once upon a time, in a faraway land called South Korea, a middle-aged woman named Heather worked 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 % 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.

To say that this undermines the legitimacy of the Republic of Korea as a democratic state, whose constitution, incidentally, guarantees economic democracy, would be an understatement.

On the flip side, the government is nowhere near as sympathetic to ordinary citizens and their travails if this comment from Kim Moo-sung, a presumed presidential contender in addition to being in charge of the country’s most powerful political party, is any indication. When recently asked about how to address the unfair treatment suffered by young South Koreans in part-time positions, he replied: “You should work hard in the thought that it is a good life experience. There is no other solution.”

Rather than enacting specific policies that would offer greater protection of workers from the tyranny of the haves, this government is adamant that when the rich behave badly, all must be forgiven. When plebs suffer, they should simply take it because it is character-building. Commoners should be grateful, after all, that they can even find jobs in this ‘terrible’ economy.

There we have South Korea’s economic system in a nutshell: plebs must endure injustice for the national collective, for the future, for a better South Korea, but select bloodlines are needed at the helm, and therefore need not respect the basic rules that govern society given their naturally endowed gift.

The idea that business talent is the preserve of the elite is not unique to South Korea: as Matthew Crawford explains in his compelling book Shop Class as Soulcraft: An Inquiry into the Value of Work, there is a history in the U.S. as well of spinning intelligence as the domain of the management elite (and justifying astronomic CEO salaries) and devaluing manual labour in order to marginalize blue-collar workers.

What makes the South Korean situation special is that business talent here is ascribed in official discourse to blood as a way of legitimating monopolies under chaebol clans.

Cho Hyun-ah’s downfall was a rare occasion for witnessing a member of this rich and powerful class on her metaphorical knees. But before we succumb to glee and call it the end, it is necessary to ask what this circus has achieved besides temporarily quenching public thirst for fairness. Is it truly a victory for justice, or is it simply a momentary distraction that serves to create an impression of an equitable society while larger structural issues of inequity are swept under the rug?

There is still time before we find out whether Cho pays the full price for her criminal behaviour. Because in one fairy tale-like aspect of contemporary South Korea, convicted members of chaebol still get to maintain their privileged positions as birthright, much like Disney princesses whose exile from the palace never stops them from reclaiming the kingdom.

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.

Cover Image: Jun Michael Park

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Se-Woong Koo earned his Ph.D. from Stanford University and taught Korean studies at Stanford, Yale, and Ewha Women's University. He has written for The New York Times, Foreign Policy, and Al Jazeera among other publications.