Published : 2013-10-04 20:59
Updated : 2013-10-04 20:59
One large business enterprise after another is implicated in a scandal involving families controlling them. Quite a few leaders of family-controlled business conglomerates, or chaebol, have recently been sent to prison for their fraudulent practices.
In July, Lee Jae-hyun, chairman of CJ Group, was arrested on charges of embezzlement, negligence and tax evasion. He was accused of creating a slush fund after fraudulently taking 100 billion won from the business group and evading 70 billion won in taxes.
Last month, an appeals court upheld a four-year prison term on Chey Tae-won, chairman of SK Group, who was found guilty of embezzling 50 billion won from two group affiliates. In the same ruling, the court overturned the acquittal of Chey Jae-won, the chairman’s younger brother and the group’s vice chairman, and sentenced him to 31/2 years in prison for conspiring with his brother. He was sent to prison from the courtroom.
The Chey brothers joined Kim Seung-hyun, chairman of Hanwha Group, and other top chaebol chairmen who had been serving prison terms. Each of them is paying the price for being blinded by unrestrained greed.
A potential addition to the list of disgraced chaebol leaders is Cho Suck-rae, chairman of Hyosung Group, who is suspected of tax evasion. The prosecution has recently started an investigation into the case in a follow-up to a conclusion by the National Tax Service that Cho engaged in accounting fraud to dodge taxes. He is also suspected of siphoning off from corporate funds to create a personal slush fund.
The most disconcerting among the latest cases is a scandal involving Tong Yang Group, a chaebol on the verge of dissolution, whose affiliates allegedly dumped their bonds and commercial paper on unsuspecting individual investors before filing for receivership last Monday and Tuesday. Most notable among the acts of deceit is the one by Tong Yang Cement.
Tong Yang Securities, the group’s brokerage, reportedly set the amount of Tong Yang Cement bonds each of its branches would be required to sell. Branch officials allegedly sweet-talked their clients, most of them individual investors, into buying 150 billion won worth of commercial paper before Tong Yang Cement filed for a rehabilitation proceeding on Tuesday. The brokerage, claiming it was not aware of Tong Yang Cement’s plan to seek receivership, has petitioned the court to turn down its request.
Now the prosecution will have to launch an investigation into an allegation that Tong Yang Cement issued commercial paper at the request of Hyun Jae-hyun, group chairman, who wanted to retain his control of the cement maker. It will have to prosecute him if he is found to have swindled investors to hold a firm grip on the company.
For Hyun and other chaebol leaders, putting companies under their control and money making may be their overriding goals. What is demanded of them is not to sacrifice their goals and become an ethical paragon. Instead, they are called on to keep their greed in check and avoid breaching the law. That is the least they are required to do in this capitalist society.