Family-Run Conglomerates Should Gain Public Trust

South Koreans have long harbored ambivalent feelings toward family-controlled conglomerates, or chaebol. No one can deny that the chaebol have greatly contributed to the country's economic success. They have created jobs, built public infrastructure, led the export industry and boosted economic growth over the past five decades.

Nonetheless, they have been blamed for the concentration of wealth, the monopoly of resources, unfair competition, lack of transparency and corrupt ties with bureaucrats and politicians. Almost every time new leadership takes the helm of the country, it talks about chaebol reform in a bid to improve transparency and accountability.

It is regrettable that no ruler has yet succeeded in bringing about a sea change to the recalcitrant corporate behemoths, tainted by accounting fraud, corruption, slush funds, illegal political donations and illicit wealth transfer. Critics have often compared chaebol to Pandora's box. Chaebol even try to stand above the law, control the government and rule the world through their emperor-style management.

In the process of rapid economic development, chaebol significantly influenced all walks of life, not only with their can-do-easily spirit but also with their money-can-do-everything mantra. Even in the unprecedented Asian-wide financial crisis in 1997-98, many conglomerates firmly believed in the myth of ``too big to fail.'' Surviving the turbulence, chaebol have become more sophisticated in engaging in unfair and illegal practices.

People can easily find examples of rampant irregularities among the nation's top business groups. The latest case is the Samsung scandal over slush funds, bribery and the illegal transfer of wealth and management rights among family members. The independent counsel summoned Samsung Group Chairman Lee Kun-hee for the second time Friday to question him over allegations of wrongdoing.

The scandal might have never surfaced if not for revelations from a whistleblower ― a former lawyer for Samsung. The lawyer, Kim Yong-chul, claimed the group created huge slush funds and that it regularly bribed government officials, judges, prosecutors and politicians. Chairman Lee also faces allegations that he illegally handed over the control of Everland, a major theme park and de-facto holding company for Samsung, to his son.

Civic groups claim the case is only the tip of the iceberg, adding that many other business concerns have engaged in similar irregularities. After the summons, Lee said he would take responsibility for the scandal. He should bear in mind that people really want to take his word for it because they hope Samsung will be reborn as a new corporate entity with improved transparency and accountability.

President Lee Myung-bak's pro-business policy does not necessarily mean that the authorities will tolerate bad practices from conglomerates. Baek Yong-ho, chairman of the Fair Trade Commission, said Sunday that conglomerates should reform themselves before asking the government to scrap business and investment restrictions. It is time for them to bolster public confidence and trust.