Seoul shares likely to keep upward march next week

Business ethics second to profit

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Published : 2014-05-27 20:33
Updated : 2014-05-27 21:35

This is the fifth in a series of articles that examine Korea’s preparedness for disasters and social risks in light of the recent Sewol tragedy. ― Ed.


The construction site of the second Lotte World Tower in Jamsil, Seoul. (Yonhap)

Without a doubt, South Korean conglomerates have been the chief driving force behind the country becoming world’s 15th-biggest economy in a single generation.

But their obsession with maximizing profit is turning out to be a double-edged sword.

On the one side, this has helped to realize the “Miracle on the Han River.” On the other, safety and business ethics have been grossly compromised.

To produce quick results, companies, many of them chaebol, cut corners to slash costs and do the work quickly. Bribes are a part of the daily routine, and rules are frequently bent. In other words, safety has not been very high their list of priorities.

“This society has put capital profit above the value of life, and profit maximization has become a national goal,” says Song Ha-suk, an Ajou University professor.

And the drive to achieve maximum results, often at the cost of safety, has not been limited to the private sector.

Under late President Park Chung-hee’s 18-year regime, which is often credited with kick-starting Korea’s exponential growth, the government conducted a number of projects that were critical to the country’s economic growth.

Their safety records, however, are far from pristine.

Some 77 workers lost their lives during the construction of the Seoul-Busan-Gyeongbu Expressway, while receiving minimum wages and working without breaks until the construction was completed in June 1971. The results: the 428 kilometer highway was completed within 29 months, and cost less than 100 million won ($98,000) per kilometer.

The legacy of the late president’s “Five-Year Economic Development Plan” campaigns that were launched in 1962, and included the building of the Gyeongbu Expressway, continues to exert its influence to this day, particularly on chaebol practices.

The state-sponsored industrialization blueprint often involved preferential treatment for chaebols, including lax regulation of market access and subsidized loans. Today, the sales and assets of the top 10 conglomerates surpass the nation’s gross domestic product.

But again, the government’s lax regulations and great dependence on chaebol has resulted in a plethora of illegal practices ― embezzlement, negligence and tax evasion ― the same charges Yoo Byung-eon, the owner of Chonghaejin Marine Co., the operator of the ill-fated Sewol ferry, is facing.

The collapse of Sampoong Department store, which killed more than 500 people in 1995, could have been avoided if the company had not forced an under-budget renovation of a shopping mall in the department store.

Hahn Sun-ku, an economics professor at Yonsei University, says the cause of all these man-made accidents was the neglect of safety for the sake of economic growth.

“When safety is emphasized, corporate autonomy can be limited and possibly become an obstacle for growth. So basically the safety has been given up in this society,” he said.

He added, however, that the implementation of new practices and ethics is long overdue as the country has matured economically.

“When we were busy working for food, feeding the children and educating them could have been the most important thing. But now Korea can afford a (high standard of) living. It is no longer legitimate to neglect safety,” he said.

By Park Han-na (hnpark@heraldcorp.com)