Efforts to solve problems emanating from corporate governance and culture within massive chaebols have gained fresh impetus from the conviction of Lee Jae-yong for bribery in a corruption scandal which was responsible for the impeachment of President Park earlier this year. For significant change in culture to occur and for forces seeking change to stand a reasonable chance of success, Mr. Lee must remain in prison rather than be subject to the pardons previous prison sentences handed to powerful businessmen have ended in. Pushed by a sizeable chunk of public opinion, the conviction will help provide political forces with momentum to create change.
The conviction, according to some observers of the various corruption trials to have taken place and that which is currently happening, increases the chances of the former president also being found guilty due to the connected nature of the three cases to have been taken to trial. Even before a verdict is arrived at, that the heir to Samsung is now in prison will help to push apart both chaebols and the political establishment now the potential consequences of the close relationship are known. Furthermore, the power vacuum that has been opened up at Samsung and the potential for family leadership in the top job to end will help push forward the reform process started earlier this year at Samsung.
The longstanding ‘Korean Discount’ problem originates from the corporate governance of chaebols. To solve the discount problem, first the culture in how the large conglomerates are organized must take place. The conviction of Lee Jae-yong can help to solve the issue provided his sentence is enforced. Without a member of the founding family in the top job, there is an opportunity for shareholders to become vocal about changing the power structure to end the Korean Discount, improving chaebol culture.