But no matter what you call each one of them – Zaibatsu (or Keiretsu) in Japanese or Chaebol in Korean or Semibankirshchina in Russian – they were (and still are) nothing but different forms of crony capitalism, which is just a comfortable arrangement between business houses, bankers & government officials.
Soon, this so-called ‘cosy’ arrangement became the bone of contention between the South Korean government & Chaebols, who were continuously manipulating their books of accounts to show a healthy balance sheet to the markets. And thus began the big dark game of secrets, lies & deception by the family-run businesses. The secret-cellar deals, the under-the-table bribery & the nasty fraudulent activities became part and parcel of the day-to-day activities of the Chaebols.
A few days before the WEF, I was lucky to catch hold of Dr. Van Jackson of the University of Maryland. Van is the global authority on East Asian History, also an analyst at Foreign Policy In Focus, and I had to get his slant... and Van didn’t disappoint. He shared with me that Chaebols pose two grave interrelated dangers – unstable concentration of capital and labour in the hands of only a few companies, and the often discussed issues of transparency and corruption. “Both these dangers scare-off risk-averse international investors, which naturally limits foreign direct investment capital inflows into the economy. In this sense, it is reasonable to blame the Chaebols for ‘holding back’ the Korean economy,” he adds.
In their over-ambition, the Chaebols lost sight of an inevitable fact – after all, a thief can steal only this long and that much. And that’s what happened in 2000. Car manufacturer, Daewoo, which was once a multibillion-dollar globe-girdling enterprise, collapsed and became bankrupt – a direct spillover of its corrupt practices. Daewoo had earlier emerged as the king of acquisitions, thanks to the cheap credit from banks. Of course, the fact that founder and former CEO of Daewoo, Kim Woo-choong’s father had been dictator Park Chung Hee’s teacher certainly helped his cause too. Even in trouble, it is rumoured that he cut secret deals with the governments to bail out his shipbuilding unit. It is alleged that during the period 1997-98, Kim masterminded what is believed to be Asia’s biggest single accounting fraud that inflated the value of Daewoo’s equity by $32 billion.
Ultimately, he decided to cut his losses and left the country (some say at the urge of former President Kim Dae-jung because of Dae-jung’s backdoor dealings with Daewoo). The moment Kim Woo-choong escaped the country; he became Interpol’s much-hated darling! A story of a man, who rose beyond expectations, added fuel to the Korean engine, and was suddenly washed away by the downpour when the dark ‘deal’ skies burst open.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Soon, this so-called ‘cosy’ arrangement became the bone of contention between the South Korean government & Chaebols, who were continuously manipulating their books of accounts to show a healthy balance sheet to the markets. And thus began the big dark game of secrets, lies & deception by the family-run businesses. The secret-cellar deals, the under-the-table bribery & the nasty fraudulent activities became part and parcel of the day-to-day activities of the Chaebols.A few days before the WEF, I was lucky to catch hold of Dr. Van Jackson of the University of Maryland. Van is the global authority on East Asian History, also an analyst at Foreign Policy In Focus, and I had to get his slant... and Van didn’t disappoint. He shared with me that Chaebols pose two grave interrelated dangers – unstable concentration of capital and labour in the hands of only a few companies, and the often discussed issues of transparency and corruption. “Both these dangers scare-off risk-averse international investors, which naturally limits foreign direct investment capital inflows into the economy. In this sense, it is reasonable to blame the Chaebols for ‘holding back’ the Korean economy,” he adds.
In their over-ambition, the Chaebols lost sight of an inevitable fact – after all, a thief can steal only this long and that much. And that’s what happened in 2000. Car manufacturer, Daewoo, which was once a multibillion-dollar globe-girdling enterprise, collapsed and became bankrupt – a direct spillover of its corrupt practices. Daewoo had earlier emerged as the king of acquisitions, thanks to the cheap credit from banks. Of course, the fact that founder and former CEO of Daewoo, Kim Woo-choong’s father had been dictator Park Chung Hee’s teacher certainly helped his cause too. Even in trouble, it is rumoured that he cut secret deals with the governments to bail out his shipbuilding unit. It is alleged that during the period 1997-98, Kim masterminded what is believed to be Asia’s biggest single accounting fraud that inflated the value of Daewoo’s equity by $32 billion.
Ultimately, he decided to cut his losses and left the country (some say at the urge of former President Kim Dae-jung because of Dae-jung’s backdoor dealings with Daewoo). The moment Kim Woo-choong escaped the country; he became Interpol’s much-hated darling! A story of a man, who rose beyond expectations, added fuel to the Korean engine, and was suddenly washed away by the downpour when the dark ‘deal’ skies burst open.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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