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Lotte probe exposes flaws of Korea Inc

Tuesday, August 30, 2016 - 01:52

South Korea's big family-run companies prize loyalty to the company and boss. That might sound like a good thing, but as Ryan Brooks reports, it's hard for loyalty and good corporate governance to co-exist. And it can even lead to tragedy.

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Is it loyalty before the law in South Korea? A suicide note left by a senior executive for the Lotte Group last week ... Casting Korean corporate culture in a grim light. Just hours before Lee In-Won was due to meet with prosecutors over an ongoing criminal probe ... He hung himself - leaving behind a letter praising his boss and defending the company. Critics are calling for more transparency and less blind loyalty in the chaebol - or big family-run conglomerates. Reuters' Joyce Lee says that will be hard. (SOUNDBITE) (English) JOYCE LEE, REUTERS CORRESPONDENT, SAYING: "South Korean chaebol has been traditionally been very good in creating immersion for its employees. For example, they make new hires go through very difficult rites of passage, and coupled with some of the longest working hours in the OECD, as well as how chaebol jobs are seen as very cultural desirable and well-paying, it's no wonder that chaebol employees associate their identities with their jobs." Lotte Group isn't the only one under the microscope. Asia's fifth-largest economy is dominated by chaebol who've run into trouble with the law. Wary investors trade the country's shares at what they call the "Korean discount" ... Meaning they sell cheap because of questions around transparency and governance. Meanwhile, change is slow. (SOUNDBITE) (English) JOYCE LEE, REUTERS CORRESPONDENT, SAYING: "One of the problems that still remain are how chaebol boards are...don't really dissent. According to the recent data there have been outside directors at chaebol boards have agreed with the agenda nearly 100% of the time." Critics say another flaw in the culture of Korea Inc - rule breakers get off too easy. The chairmen of Samsung and Hyundai Motor have both been convicted of crimes ... But had their sentences suspended.... ....and were later pardoned by the president.

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Lotte probe exposes flaws of Korea Inc

Tuesday, August 30, 2016 - 01:52