
Samsung chief Lee arrested as S.Korean corruption probe deepens - JumpCrisscross
http://www.reuters.com/article/us-southkorea-politics-samsung-group-idUSKBN15V2RD
======
lowpro
I'm currently doing research with students from South Korea, this surprised no
one. They actually have a saying about "Keeping in touch with a cousin's
cousin if they work at Samsung." In SK you're considered well off/rich if you
or any family works there because it's the main tech business. After Choi
Soon-sil the government is seen as corrupt through and through, in glad
they're doing something about it, as most of the population (95%) disapprove.

~~~
rebootthesystem
I had a business conflict with Samsung about a decade back. In the end, it
cost us nearly a million dollars and probably many times more than that in
opportunity cost.

I found them to be extremely dishonest and, by reason of sheer size, very
aware of the fact that they are able to virtually exist above the law. What I
mean by that is that they have no problem whatsoever throwing their weight and
money around to cause so much damage that you'd rather take the abuse and the
loss instead of fighting them.

In our case, they had one of their top three US executives blatantly lie in
court. I could not believe it. This guy repeatedly lied under oath and his
attorney (a Samsung attorney) did the same.

Could we have won? Absolutely. It would have required a million dollars cash
(on top of the damage they caused my business) and probably two years of being
buried under an intense legal campaign designed to cause damage at every
possible turn.

Here's an example of what they did: They filed for a broad TRO (temporary
restraining order) to keep us from talking to any of their competitors at a
time when they breached a contract and discontinued components we designed
into a line of products over a period of about ten months of work. Components
the top Samsung executives in the US helped select and vouch for.

The TRO covered getting within a certain radius of a trade show attended by
Samsung as well as every single one of their competitors. The radius was such
that we couldn't even park a car within walking distance of the convention
center, much less come in and go talk to alternative component sources. A few
weeks later the judge who oversaw the TRO chewed-out the Samsung attorney for
resorting to such a nasty destructive approach. Still, the damage was done.
You'd have to fly all over Asia to see the people we could have seen in a
couple of days at the conference.

So, yeah, I've seen one side of this beast and it's nasty. Nearly killed my
manufacturing company. I don't generally think of large corporations as evil
but in this case I could be convinced to make an exception.

~~~
SiVal
Back in the '80s, when Korea was still a military dictatorship and Samsung was
still run by its original founder, one of the founder's sons was recruiting me
for some unusual (non-criminal) skills I had. He made it clear to his staff
that he wanted me as one of his guys for special projects, and the way the
somewhat militaristic Samsung guys kowtowed to me was truly creepy, even for
dictatorship-era Korea. I was well aware that it wasn't about me but entirely
about the founder's son. I was a pure symbol, inspiring fear and with no
intrinsic value of my own whatsoever.

The founder died as this was happening, and I was quickly warned by some
decent insiders that I should cease all contact with my benefactor and get
away ASAP. The sons of the founder were going to fight for power and, as the
Koreans say, "when whales fight, the shrimp's back gets broken". In a clash
between the most powerful men in a military dictatorship, little people could
have tragic "accidents", and so what? I took their advice.

The same family controls that company today. The guy just arrested is the
nephew of my old "benefactor". The country is no longer a dictatorship, but
the powerful people at the top haven't necessarily changed their ways. Every
few years, there are accusations that the top Samsung people are guilty of
bribery or similar manipulations. Hard to believe, right? They'll get charged,
then the charges are dropped. They'll be convicted, then pardoned by the
President. These are power struggles by people who are all above the law but
not necessarily above one another. If you do business with them at the small,
overseas, trivial level, this may not matter, but you should be aware that
behind them you have a system that plays by older rules.

~~~
rebootthesystem
That's amazing.

My father had textile factories in South America. During the days of military
regime it wasn't uncommon for him to receive visits from "the general" and a
truck full of soldiers with automatic rifles. I was way too young to
understand it, that's why I put it in quote. For all I know it could have been
a mid-rank idiot but to me he looked like the general.

As my father tells tells the story, as power transitioned someone advised him
to "evaporate". Since he had business in the US as well it wasn't that hard to
pull-up anchor and legally emigrate for the last time. His businesses were
usurped by whoever gained power and that was that. A lifetime of work gone
"puff" virtually overnight.

These are aspects of life people in the US are not tuned into. We have a very
linear environment when compared to some of what is daily life in other parts
of the world.

~~~
pm90
Rule of law is(was?) precipitously absent in most South American countries.
Only recently have things started to change. But its stories like these that
scare away investors really and cause way too much hardship for the nation as
a whole, down the line.

Something similar exists now in Russia and Venezuela, I imagine.

~~~
geodel
I think rule of law as it is understood is mostly applicable to first world.
E.g. countries like India may not have military dictators and all but deep
corruption is way of life. It is not for lacking of laws but because for most
of the population it is morally justifiable to take bribes, not pay taxes,
jump traffic lights and so on.

Why is it morally ok? Because earth is a place of sin anyway and goal is to
work towards going to heaven. This is done by performing religious duties. So
'rule of law' is either an inconvenience or irrelevant towards main goal of
life.

~~~
pm90
> Why is it morally ok? Because earth is a place of sin anyway and goal is to
> work towards going to heaven. This is done by performing religious duties.
> So 'rule of law' is either an inconvenience or irrelevant towards main goal
> of life.

Heh. If you're smart enough, you can "morally" justify anything I guess.
People living in the "mortal plane" do need to accept the laws that govern
that plane though...or work to change them if they are not acceptable.

------
pcurve
This is basically payback time for Korean people. Lee is partly paying for
sins of his father and grandfather.

In the 60s, his grandfather got slapped on the wrist for major tax evasion
charges.

In 2000s, his father basically got off scot-free for tax evasion and having $4
billion in political slush fund.

And just like his Dad and Grandfather, he also 'almost' got away with bribery
charge, when presiding judge unexpectedly kibosh-ed the case a few weeks ago,
much to chagrin of special prosecutors that brought charges against him.

National wide outrage ensued, and then the appeal followed. Now he is in the
slammer awaiting trial.

People are so pissed off, even if his hands were completely clean, they may
have to put him away. (figure of speech)

~~~
JumpCrisscross
Are Korea's other families similarly vulnerable?

~~~
pcurve
I would say so.

I know someone who does private Pilates training at homes of ultra rich
families in Seoul.

Because of the fall outs from this scandal, she is saying that all her clients
are cutting activities and laying low.

Older generation of Koreans in general have more lax attitudes about political
abuses by the wealthy families because they also indirectly benefited from the
cozy conglomerate & government relationships, and saw Korean rise from abject
poverty.

No so with the younger generations born after the 60s. They've basically had
it with the current soul-crushing system, and are desperately hoping for
radical reform. And in doing so, they're willing to watch their world burn.

~~~
sooheon
> And in doing so, they're willing to watch their world burn.

This is an interesting note to end on. Do you think what is happening now,
which I see as the least bit of accountability being seen for the first time
in a chronically corrupt system, is people "watch(ing) their world burn"? This
is something our country desperately needs to rise above the legacy of
dictatorship and corporate profiteering.

~~~
pcurve
That was a poor phrasing on my part. What I meant to say was something along
the line of, "people are willing to take big hits to see reforms take place".

I don't think their world is burning. With all the turmoils going on in parts
of the globe, world-burning would be a hyperbolic characterization.

I do feel that it's been on a slow roast for the past 20 years, with
temperature steadily rising each year. At some point, the situation becomes
intolerable for critical mass, and people will jump out without looking; some
not caring if it is straight into frying pan. I think we are there now.

I've never seen this level of frustration since the late 80s.

~~~
kobeya
Usually putting corruption behind bars isn't described as "taking a big hit".

~~~
Applejinx
I think the implication may be along the lines of 'the huge corporation will
intentionally burn the world itself by way of taking the world hostage'.

Due to the wildly overleveraged nature of capital it's not an idle threat:
these entities may be in a position to go 'well then, if we suffer the
slightest penalty we will trigger global/countrywide economic disaster' with
some credibility. The overall economic system is anything but healthy, so the
threat is legitimate. However, there comes a time people don't even care
anymore, they just want to see something resembling justice. That point
seemingly approaches.

~~~
lightedman
"these entities may be in a position to go 'well then, if we suffer the
slightest penalty we will trigger global/countrywide economic disaster' with
some credibility"

That's when we're supposed to step in and end their terrorist selves.

------
yongjik
Who would have thought that buying horses for president's best friend's
daughter[1] would be Samsung's ruler's undoing...

(Wow, that's a lot of "'s"'s...)

[1] For those who don't follow South Korean news closely:
[https://en.wikipedia.org/wiki/Chung_Yoo-
ra](https://en.wikipedia.org/wiki/Chung_Yoo-ra)

She's currently in a jail in Denmark, fighting extradition requested by Korean
prosecutors. In addition to tripping Lee, she also got multiple professors in
Ewha Womans University arrested for corruption. (Yay?)

~~~
ithought
To be fair, her dad was an infamous "shaman-esque pseudo-Christian cult
leader" who was the mentor to the former President and used his friendship to
solicit bribes.

And her and her mother are accused of laundering $1 billion. At only 20 years
old, it'd be fascinating to hear her philosophy/perception of business and
life.

~~~
yongjik
Well, we kind of know Chung's philosophy on business and life. A 2014 Facebook
posting of hers was "discovered" after she got infamous, and it was a
goldmine:

> 능력없으면 니네부몰원망해 (...) 돈도 실력이야

(If you aren't capable, resent your parents. Money is ability.)

On one hand, it's a bit unfair to dig FB postings of clueless youngsters. On
the other hand... wow.

~~~
Applejinx
Accurate perception of our globalized economic/political system, I'd say. If
there's a 'wow' in here, it's 'wow, is this the best civilization can do in
2017?'. Seems… sub-optimal.

~~~
Filligree
Look to Scandinavia; it's not our best.

I despair of finding ways to reach there, however.

------
hackuser
A serious question: Could this happen in the U.S.? Has a CEO of one of the
largest companies in the nation (and world) ever been arrested? I think the
odds are that someone, some time, has deserved it (though I'm not at all
advocating arresting CEOs to meet a quota).

It's similar to another practice I've noticed: Other countries will arrest and
imprison heads of state and other high officials, including Israel and France.
It's hard to imagine that happening in the United States: Has a President or
cabinet-level official ever been arrested?

In what seems like a corrupt practice to me, in the U.S. they get off with a
slap on the wrist. For example, Nixon was pardoned for the sake of the nation.
Why is it that other nations can handle it?

~~~
vkou
It used to be possible. [1]

Jeffrey Skilling, former Enron CEO is serving 24 years.

However, there is a strong argument to be made that ever since Enron, the SEC
has been defanged.

Taking a brief look at their list of accomplishments, it seems that these
days, they just levy fines, instead of jailing criminals. [2][3] (Contrast the
punishments for the financial crisis, vs low-level insider trading. The
companies involved in the former pay fines, the people involved in the latter
go to jail.)

[1]
[https://en.wikipedia.org/wiki/Enron_scandal](https://en.wikipedia.org/wiki/Enron_scandal)

[2] [https://www.sec.gov/spotlight/enf-actions-
fc.shtml](https://www.sec.gov/spotlight/enf-actions-fc.shtml)

[3]
[https://www.sec.gov/spotlight/insidertrading/cases.shtml](https://www.sec.gov/spotlight/insidertrading/cases.shtml)

~~~
pcurve
The charges against Samsung and Enron CEOs are completely different.

Former, it's bribery. Latter, some insane level of securities fraud / book
cooking.

Judges would come down harder on the latter.

But it's an interesting question.

Basically this is equivalent a major U.S. company like Boeing or Disney
indirectly bribing close friends of Trump to gain political favor.

~~~
tornadoboy55
I'm not exactly a Trump fan, but why is Clinton's daughter rolling into a
$600.000 job at NBC straight out of college not considered 'bribing close
friends for political favor'? The US is so fucked up politically..

~~~
openasocket
Are you talking about Chelsea Clinton? According to Wikipedia, she didn't
exactly get that NBC job "right out of college". She graduated from Stanford
in 2001, got a masters degree at Oxford in 2003, did some consulting work,
went back to school to get another masters degree at Columbia in 2010, and
_then_ she got hired by NBC for $600k in late 2011. So yeah, if by "right out
of college" you mean "a year after getting her second master's degree" you are
correct.

Oh, and while she was working at NBC she also got her PhD in international
relations from Oxford. That's not really relevant to your claim, I just found
it very impressive.

~~~
DrScump
A better parallel is a USA Vice President's son getting a Board of Directors'
slot in a foreign oil company[0].

[0] [http://www.bbc.com/news/blogs-
echochambers-27403003](http://www.bbc.com/news/blogs-echochambers-27403003)

Regarding Chelsea Clinton: in reading her various writings from the email
leaks, she strikes me as both highly intelligent and insightful (speaking as
no fan of her parents).

~~~
Shivetya
Chelsea Clinton's job was payment so that access could be retained to her
parents and would have paid incredible dividends if Mrs Clinton had one. I
also seriously doubt anyone would call for her to leave her post if that had
happened, heck they would probably have her interview her mother.

The simple fact is that children of political power centers get special favor
because those interests want access to the parents

~~~
openasocket
She only worked that job from 2011-2014...

------
resonanttoe
I don't pretend to know the inner workings of South Korea's political turmoil
right now.

But hasn't it long been held/believed that Samsung has had a rather dominant
political position from behind the scenes in South Korea?

~~~
hkmurakami
Yes. My college roommate (from Korea) once told me that Samsung is "above the
government", when I asked him whether Samsung influences the government.

But naturally they must have enemies within the system. And as a country
modernizes, it becomes harder and harder to maintain that tight control. So
perhaps the enemies are striking as hard as they can to dethrone Samsung. One
consideration is whether the enemies are also Cheabols though.

~~~
yongjik
The relationship among different Chaebol families is less like different Mafia
factions, and more like different Wall Street bankers. They may compete in the
market, but they're all in the same boat, and they have a vested shared
interest in keeping themselves largely out of the law's reach.

Moreover, virtually all of them are connected to each other (and to most
powerful politicians) via marriages. In a sense, they are one big (corrupt and
powerful) family.

~~~
sevenfive
> The relationship among different Chaebol families is less like different
> Mafia factions, and more like different Wall Street bankers. They may
> compete in the market, but they're all in the same boat, and they have a
> vested shared interest in keeping themselves largely out of the law's reach.

This isn't describing a difference -- Mafia families have the same interest.
Omerta and all that.

------
joecool1029
Will he be pardoned for the third time and by the third different president?

(probably)

~~~
LandoCalrissian
I don't actually know much about South Korea. Could you provide more context
here?

~~~
pcurve
Probably in reference to his grandfather and father basically getting away
with not serving jail time for their corrupt dealing associated with former
presidents of Korea. President Roh Tae Woo and Park Jung Hee (father of the
current president)

------
brilliantcode
This is merely a symbolic gesture. People are _pissed off_. They want to see
blood. CEO of Samsung is an easy target.

In reality, he'll be out once the whole situation simmers down and people
forget.

This has how it has always worked. _Chaebol_ CEOs are untouchable and they are
fully aware of their position in society and abuse it to maximize their
interests.

I'm not even remotely surprised by the anecdotal experiences of dealing with
Samsung. Don't forget about SNES cartridges that used to be sold in Korea.

------
sengork
I wonder what impact (if any) this will have to Samsung's vast customer base.
Somehow I think there would be contingency plans in place from risk management
perspective.

Samsung is a large competitor in many industries and that on its own benefits
even those who are not their customers.

~~~
pzone
In the long run it could hopefully be a good thing, if better corporate
governance results in Samsung improving its operations and becoming even more
innovative.

------
fersho311
It just dawned on me that the president of South Korea is female. Its even
more surprising when you realize that most korean families think very
conservatively when it comes to the female role in a family household.

~~~
peterjlee
She's also a daughter of the former president(dictator) who modernized South
Korea. Her father was the main reason why people either voted or didn't vote
for her. When she was elected it came as a shock to most liberal people just
like when Trump won.

~~~
nonbel
>"She's also a daughter of the former president"

Interesting, in the US we had two Bushes and recently narrowly avoided a
second Clinton. In Canada they are on their second Trudeau. How many other
republics/democracies is this happening to?

>"came as a shock to most liberal people"

The dynasty thing seems to cross political lines in North America.

------
known
His family was running a Pyramid scheme with tacit support of Administration

------
fiatjaf
Where there is big government there is big corruption.

~~~
realusername
The issue is in this case big companies, not big governments.

~~~
fiatjaf
Really? No government involved?

~~~
realusername
This issue happens specifically because Samsung is bigger than the government
and becoming its own government in itself, you don't see small companies
bribing the Korean government

~~~
fiatjaf
So I was right.

