By Cho Jin-seo
Money is the ultimate enabler or so it is widely believed.
A scion from one of Korea’s wealthiest families has tested the truth of the power of money and is now paying the price, so to speak.
In October, Chey Chul-won, a child from the SK founding family, allegedly called in a disgruntled oil truck driver Yoo Hong-joon to his office and hit him with an aluminum baseball bat, according to Yoo. Then, Chey went on to hit him in the face with his fists. It was first reported by MBC broadcasting station’s news magazine. When he was done with his violent rampage, Chey left two checks, each worth 10 million won for him.
SK Energy, the firm Yoo had worked for, and had been holding a one-man rally against, says it has nothing to do with the cruel incident. Yoo had claimed that he was fired illegally by M&M, a logistics subcontractor of SK Energy. He had protested by parking his truck in front of SK headquarters building in downtown Seoul for at least six months since January.
“We are not involved in this case and we didn’t know what had happened. We just thought that things were finally sorted out when we saw that the truck was no longer there,” a PR official of SK Energy told the Korea Times on Monday.
Later the day, the police sought an arrest warrant on Chey.
For people who commute to the tidy business district of central Seoul, the sight of Yoo’s dusty oil tanker parked right next to the sleek SK building was a familiar sight. The lorry had writing sprayed in red letters all over its body and windshield, which read “SK promotes illegal loading onto trucks. SK should blow itself up.”
Yoo was the leader of the truckers’ union in Ulsan, where SK Energy’s refineries are located. He claims that M&M ended his contract in an illegal fashion, so either M&M or SK Energy, the end user of his lorry, should take responsibility.
The thuggish Chey responded to the lorry driver in his own fashion. SK Group pleads innocence, claiming that the violence took place at M&M, a separate logistics company run by him, not at a subsidiary of SK Group.
But the bully is the nephew of SK Founder Choi Jong-kun (they use different English spellings for the same family name in Korean) and cousin of its current chairman Chey Tae-won. And two thirds of M&M’s sales last year came from SK Energy and SK Networks, according to its 2009 financial report. This is a typical method of “tunneling” ― chaebol businessmen use corporate wealth for the benefit of their family members.
On Sunday, further embarrassment emerged. MBC’s follow-up report cited more than five witnesses to support that Chey had beaten his own employees with golf clubs and shovels from time to time. Chey, a former Marine and an alumnus of Korea University, even threatened his neighbors with his favorite baseball bat when they complained about loud noises at night, according to another report from SBS.
Chey treated employees like family-owned slaves and one former employee was quoted as saying, “Can you imagine these things? There is no law for this person.”
It was a threat to the Chey family’s and SK brand image. But the case also raised fury among citizens that Korea was becoming a banana republic where the families running chaebol, the Korean conglomerates, can live happily above the law. “The incident shows how chaebol families in Korea look down on laborers,” the Democratic Labor Party said in a press release.
When Chey met reporters at the prosecutors’ office, he did not try to explain or apologize for the violence. Instead, he said, “I would rather say I am sorry for creating such a social uproar.”
Korea’s chaebol families are credited for their strong leadership behind the rapid economic growth of the country but they are also noted for creating such “social turbulences” with numerous cases of book cooking, fake bank accounts and tax evasion.
Current leaders of the big three chaebol ― Samsung, Hyundai Automotive and SK ― all have been caught committing such corporate crimes but each of them was released with suspended sentences. Judges are lenient on corporate criminals. Among large chaebol, only LG’s Koo family maintains a clean record.
But the misbehavior of chaebol and their family members are not confined to white-collar crimes, as the bat-wielding Chey freshly confirms. In 2007, Hanwha Group chairman Kim Seung-yeon was convicted for kidnapping, attacking and threatening bar employees who were involved in a brawl with his son. Reporters were surprised during the court proceedings when Kim seemed to enjoy describing the way he had punched them.
Hanjin Group, which runs Korean Air, had a similar problem of a tainted corporate image from violence of members of the founders’ family. Cho Won-tae, the only son of chairman Cho Yang-ho, was investigated by the police in 2005 after hitting a 77-year-old woman on the road.
The young Cho, then 29 years old, got into an argument with the lady’s son while they were driving head to tail near Yonsei University in Seoul. He was released with a minor fine, and is now working as an executive and is the heir apparent of Korean Air.
Critics say that the real problem behind these incidents at chaebol families is that firms have to pick up the bill and clean up the PR mess, thus inflicting indirect damage to the shareholders.
Both in Hanwha’s and Hanjin’s cases, the companies used their public relations teams to protect the reputation of the companies as well as the private lives of the chairman’s families. When Kim was arrested for beating bar employees, Hanwha Group tried to sway the public opinion by collecting petitions from its employees.
Sometimes, the PR teams try to buy media’s support, or indifference, when chaebol families are caught in the web of scandals. According to a study from the Korea Press Foundation, Hyundai Automotive Group dramatically raised its PR budget between April and June of 2006 when chairman Chung Mong-koo was arrested and then nosedived when he was released with a suspended sentence.
The hike of ads spent to cover up chaebol families’ wrongdoings was also apparent with Doosan Group (2005), Samsung Group (1996) and Hanwha Group (2007), the report said.
“The tangible and intangible assets of the companies were used to smooth over the ruffles of the chairman’s private problems, and a representative individual’s illegal activities threaten the entire company. But they did not set up a firewall to contain the damage,” Kim Sang-jo, professor of Hansung University and leader of Solidarity for Economic Reform, an NGO, said regarding the Hanwha case.