The Wall Street Journal (20070518)
Hanwha chief, accused of avenging son’s beating, faces prison term
By Evan Ramstad And Lina Yoon
Kim Seung-youn
SEOUL—At the end of a night of drinking in a karaoke bar here in early March, Kim Dong-won, a 22-year-old college student, got caught up in a fight that left him needing 13 stitches on his forehead.
The next night, his 55-year-old father, chairman of one of the country’s largest conglomerates, exacted revenge, police say. They say the father, Kim Seung-youn, directed three associates, who rounded up 12 people, including a former boxer and an organized crime figure, and took the men involved in the fight to a construction site outside Seoul. There, they say, the men involved in the bar fight were beaten by several people, including Mr. Kim himself.
What happened next was extraordinary in a country where the power of conglomerate chairmen is rarely questioned.
Rumors about the revenge attack, which initially found their way onto Internet discussion sites, were eventually splashed across the local media. Police, whose initial investigation ended quickly when one of the victims’ bosses said nothing had happened, restarted their probe late last month amid a growing public uproar. In the blaze of publicity that followed, victims, participants and witnesses poured out details of the alleged crime.
Last week, police arrested the elder Mr. Kim on six charges of assault, abduction and confinement. In the South Korean justice system, an arrest must be approved by prosecutors and a judge and in almost all cases leads to indictment and trial. On Thursday, police officially handed the case over to prosecutors. In all, 25 people are being charged with crimes in the episode, including Mr. Kim’s son and the man who hit him in the original bar fight, police announced.
If Mr. Kim is found guilty, he could be sentenced to 22 years in prison. He may be forced to give up the top job at Hanwha Group, the conglomerate of insurance, chemicals and other companies started by his father and which he has led since the age of 29. Hanwha is the nation’s 10th-largest conglomerate by assets, which is how companies are often ranked here. Hanwha had total sales of about $23.7 billion last year for the group’s 34 units.
Before his arrest, Mr. Kim denied to police and the public that he was involved in the beatings. But after his first appearance before a judge last week, he said, “I am greatly reproaching myself for not behaving according to legal procedures from the beginning of the incident.” Mr. Kim couldn’t be reached for this article.
Mr. Kim appears to be the first corporate chairman to have been arrested in a violent crime, as opposed to a white-collar case. And the episode seemed to confirm the worst suspicions and stereotypes about behavior at the top of Corporate Korea. The country’s conglomerates were formed with government backing in the 1960s as a means to quickly lift the country out of poverty, and they still dominate its economy today.
For years, South Korean politicians preached that business leaders needed to be treated differently because they were doing the all-important work of building the country’s economy. Even today, the conglomerates are structured in a way that concentrates power with the chairman and requires employees to pay unflinching deference. Mr. Kim seemed to acknowledge that his actions tarnished more than just himself and his company when, after the arrest, he told reporters: “I sincerely apologize to all businessmen who work hard for the country’s economy for creating a misunderstanding about them.”
Most Koreans are less impressed and intimidated by the conglomerate chiefs than they used to be, a change that is partly a sign of their own growing affluence. In addition, as leadership of the conglomerates has passed from founders to their children and grandchildren, the heirs are less well-regarded than their forebears were.
“The perception of the younger generations of the conglomerate families is they are rude and mean,” says Kim Hye-jung, an office worker in Seoul. “People are much more critical with the conglomerate families when they do something wrong. Before, they would have to hold it to themselves.”
During the past few weeks, antiHanwha Web sites sprouted up, and some people tried to organize a boycott of its companies, which include the country’s second-largest life insurer, hotels and a professional baseball team. College professors used the incident to start discussions about business ethics and Koreans’ changing views of law and order. President Roh Moo-hyun, who campaigned in 2002 calling for reforms in the conglomerates, told police to conduct a full investigation.
Even proconglomerate voices recognized the damage. “This case cannot be seen as just a funny story in which a chairman wielded a lead pipe while wearing leather gloves,” wrote Moon Chang-keuk, vice publisher and chief editor of the Joong Ang Ilbo newspaper, an affiliate of South Korea’s largest conglomerate, Samsung Group. “This case shows that money can be translated into power, or even worse, buy conglomerates authoritative power.”
To many people, the surprising ingredient in the Hanwha episode is Mr. Kim’s personal involvement. “I was shocked that he didn’t just send some people,” says Lee Sangyeol, a financial-company employee in Seoul. “I could only laugh at the situation. He should have known this could get out there.”
According to police, Mr. Kim enlisted the help of a Hanwha secretary, a manager and a bodyguard to find some people to fight the men who hurt his son. The night after the karaoke-bar altercation, the men involved in it were called back to the karaoke club to apologize. Once there, several of the men have told police, they were pushed into cars and taken to a mountainside construction site outside the city.
Police said both Mr. Kim and his son hit the men, citing the accounts of the victims and of witnesses who include a friend of the son. Some of the victims said Mr. Kim swung a pipe, but Mr. Kim has denied that.
In his public statement after his arrest, Mr. Kim called himself a “foolish father” and said he should have chided his son before becoming angry with others.
Mr. Kim took over the Hanwha conglomerate 26 years ago after the death of his father, who started the group with an explosives company. Mr. Kim became more involved in the chemicals industry and made several acquisitions, including Korea Life Insurance Co.
Hanwha at the start of this year launched a new corporate-brand campaign aimed at lifting the image of the conglomerate and its biggest consumer unit, Korea Life. As part of that, Mr. Kim figures prominently on the company’s Web site, which carries the slogan, “Your Dreamworld, Hanwha,” on its home page. A lengthy photo gallery devoted to Mr. Kim includes excerpts from his letters and speeches to company employees. During a difficult stretch in the late 1990s, he told them, “We will continue to carry out our reform drive, which will call for sacrifice and may be extreme at times. However, I believe we all agree that this is the only way for us to survive.”
For now, Mr. Kim will be able to manage the group from jail because each of its companies has its own chief executive, says Ju Cheol-beom, a spokesman for Hanwha Group.
“If this lasts a long time, we may set up an emergency management system,” he says.