SEOUL - South Korea's business lobby groups welcomed a special pardon for
convicted business leaders on Tuesday, saying the move will help encourage the
business community to redouble its efforts at job creation and capital
spending.
President Lee Myung-bak's sweeping special pardon of more than 70 convicted
South Korean businessmen includes Hyundai Motor chairman Chung Mong-koo, SK
Energy chairman Choi Tae-won and Hanwha Group chairman Kim Seung-yeon.
"We welcome the special pardon," the Federation of Korean Industries said in a
statement. "Businessmen will make more
efforts to generate more jobs and boost capital spending for economic growth."
The Korean Chamber of Commerce and Industry said the special pardon will also
help to boost transparent corporate governance and ethical management. The
presidential office said the move is aimed at revitalizing the Korean economy
and helping conglomerates increase employment.
Nevertheless, the decision was criticized elsewhere as likely to increase
foreign investors' perception that business in Korea was inequitable for
non-Koreans while supporting the view that chaebol, family-run
corporations with strong government ties, increased corruption and worked to
the disadvantage of minority shareholders.
"The pardons demonstrate to foreign investors that there is no level playing
field in Korea," Bloomberg News quoted Kim Tae-dong, an economics professor at
Sungkyunkwan University in Seoul and former monetary policy maker, as saying.
"In order to do business here, you have to join hands with a chaebol,
which is no different from the state of affairs before the Asian financial
crisis."
Lee, a former star executive at Hyundai Engineering and Construction Co, took
office in February as the nation's first leader from a corporate background.
His popularity has tumbled as the country battles with rising inflation and
unemployment fears and in reaction to his government's agreement in April to
import beef from the US.
"I am aware that there is criticism of the amnesties and personally I oppose
them," Lee said in a statement on Tuesday. "But I considered slowing investment
and decided that businesses may be facing difficulties."
South Korea's central bank last week raised interest rates by 25 basis points
to an eight-year high of 5.25% to rein in inflation running close to a 10-year
high at 5.9% in the second quarter compared with 2.5% a year earlier. Rising
prices are pushing up company costs, while shoppers are cutting back on
spending.
The government on Monday announced plans to sell or merge 41 state-owned
companies as part of efforts to revitalize the economy and cut government
spending. The plans include a merger of Korea Land and Korea National Housing
and the sale of stakes in Incheon International Airport and part of Industrial
Bank of Korea.
Hyundai chairman Chung was convicted of embezzlement and breach of duty in
February of last year. His three-year prison term was suspended for five years
and he is now free to run the automobile conglomerate.
Hanwha's Kim was accused of using his personal security guards to beat up
off-duty bar workers in a sensational revenge attack after his son was hurt in
a scuffle this year. Kim's jail sentence was also suspended.
SK Energy's Choi was convicted of fraud five years ago, and his jail sentence
was also suspended. SK Global Co, an affiliate of SK Energy, misstated 2001
earnings by 1.5 trillion won (US$1.43 billion).
Former Samsung Group chairman Lee Kun-hee, who recently received a suspended
jail sentence for tax evasion and is appealing the ruling, was not included on
the list of those to be pardoned because his sentence has yet to be determined.
Most of the other convicted businessmen to be pardoned are already out on bail
after receiving suspended jail terms on convictions including bribery and
accounting fraud.
Shares of SK Energy, Hyundai Motor and Hanwha Corp closed little changed on
Tuesday as the benchmark Kospi Index declined 0.25%.
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