South Korea’s government and business are over-close
Lee kun-hee embarked on a world tour in 1993 to take stock of Samsung, the firm he inherited from his father. Finding its televisions and other electronics languishing on shelves, he decided to remake Samsung’s image. “Change everything but your wife and your children,” he told employees. One thing that didn’t change, according to a ruling by the International Centre for Settlement of Investment Disputes (icsid), is the close relationship between such chaebol, family-run conglomerates that form the backbone of South Korea’s economy, and the government.
On June 20th the World Bank’s arbitration forum ruled that South Korea’s government had left Elliott Investment Management, an American hedge fund, out of pocket by improperly meddling in a merger between two units of Samsung. The deal in 2015 between Samsung c&t and Cheil Industries was seen as an attempt to ensure a smooth succession between Mr Lee and his son, Lee Jae-yong. Elliott, which owned a 7% stake in Samsung c&t, objected to the valuation of its shares and launched a proxy battle, which it lost after South Korea’s National Pension Service (nps), which held stakes in both firms, backed the deal.
Yet in 2016 Moon Hyung-pyo, the health minister at the time of the merger and by then the head of the nps, was indicted for pressing the pension service to approve the deal. This triggered a series of investigations into corrupt dealings between Samsung and the government which revealed that the younger Mr Lee had bribed the then president, Park Geun-hye, to aid his succession. Ms Park was impeached; both ended up in jail (and both were subsequently pardoned).
2023-06-29 09:38:40
Original from www.economist.com
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