Collusive Links Broken?
The Constitutional Court of South Korea mentioned South Korean conglomerates’ donations to the Mir and K-Sports Foundations as a reason for the impeachment of President Park Geun-hye.
Under the circumstances, collusive ties between South Korean conglomerates and political circles, which have lasted for more than five decades, are expected to be severed.
The collusive links are because the growth of the South Korean economy has been led by the government. This economic development model has given rise to the prevalence of corruption. In 2016, South Korea ranked 52nd among 176 countries in the Corruption Perceptions Index released by the Transparency International Korea.
The Federation of Korean Industries, which was modeled after the Japan Business Federation, is a part of the collusive links. It played a central role during the transfer of the donations as it did back in 1988.
South Korean conglomerates are expected to accelerate their innovation by taking this opportunity. Recently, each of Samsung and SK set up a new system so that any contribution or donation worth more than one billion won (US$855,000) is subject to a prior approval by its board of directors.
In addition, the Federation of Korean Industries is working on organizational reform, not ruling out the possibility of the disbandment of itself. Samsung Electronics is preparing new measures for the enhancement of transparency, including recruitment of former global enterprise CEOs as its outside directors.