I would hesitate to guess how many customers they have here. As few as possible, I’m sure. Probably banks, government bodies and local investment firms among them.

Linkd, obviously many Koreans think that Goldman Sachs is providing them with a service they really want, having poured tons of money into their coffers. Is Goldman ripping people off and making too much profit? If you think so, don’t put your money in. But why should anyone give a damn how much profit any company makes, as long as the customers get what they want out of the services provided (and as long as they don’t get it illegally or screw the customer, the shareholders or others for it).

I’m not saying I want to see this outcome by any stretch, I hope the Korean gov’t gets its act together and pushes for innovative smaller companies to make up more of the economy.

What Chung did (or at least what he did in the case quoted above) was to lowball company assets (in this case the stocks held in the cross linking structure of the Hyundai Motor chaebol), stole cash to buy the assets (actually this may have been as simple as an accounting entry to have one company with cash “buy” the now lowballed stock), and all with the intention of solidifying family control of the company.

In doing so the following parties were wronged:

1. The company(ies) for the loss value those assets if fairly valued
2. The shareholders for the loss of value of the stocks owned, and moreover for the breach of trust they placed with Chung as Chairman charged with maximizing the value of the company.
3. The government since they would normally collect taxes on things like a possible capital gain, dividends, and probate.
4. In a broad sense everyone, since Chung’s actions reflect poorly on Korea’s business environment and corporate governance.

CM> So no, Chung’s actions were in no way connected to “business use”, even in the broad sense you use the terms. They were for purely a selfish venture.

Furthermore using your argument, the liquor companies mentioned should be absolved of any wrong doing, both for the slush funds and the distribution practices. So even with your twisted definition of “business use”, there is still a double standard.

Miguk> I think the real problem here is not the corruption per se, but the unpredictable nature of it and the business and legal environment it creates. For example Lone Star. Its one thing to have a bias towards foreign capital. Its another to encourage it, international agreements aiding, accept 99% of transactions in a seemingly fair and legal manner, and then arbitrarily go after 1% of the transactions by twisting the law like a pretzel maker.

That 1% creates further unpredictability to the business, and as said above is one of the reasons for the “Korea Discount”.

I think there’s a huge cultural issue that to almost all foreigners, seems like favortism towards Koreans and bias against foreigners.

Much of it stems from the fact that most western companies have a long history of using (and most of the time respecting) laws and contracts when doing business, sometimes at the expense of pragmatism and spirit, whereas Korean companies seem to rely less upon laws and rules and more upon doing “what seems right at the time”.

The conflicts between the two sets of beliefs comes in when:

1) Westerners place more stock in laws and contracts than Koreans do

2) “Korean national interest” almost always (99.9% of the time) means favoring Korean nationals or those of Korean blood over foreigners.

Hence, the perceived bias many foreigners and foreign companies feel.

Say, for example, a western executive of a huge company with a huge presence in Korea (Korean citizen or not) did the same thing as the chairman of Hyundai for the same reasons. Do you believe the Korean legal system would have let him or her free to “guarantee his(her) right to a defense and minimize the impact on the nation’s economy.” ?

I seriously doubt it. Hence, the bias many here talk about and the “Korean discount” that still applies today in the business world. I believe “discount” is in terms of risk and is similar to bonds, where more risky bonds have to be sold “at a discount” when compared to lower-risk bonds. So, Korea has to “sell itself” to the rest of world at a discount versus other countries which have more uniformly enforced and consistent laws.

The message being (unintentionally) sent by Korea to foreign companies is that they better factor in a sizable risk premium. Should any dispute take place, the foreign company will most likely lose, whether monetarily or being forced out. It’s no wonder the “free economic zones” have been a complete failure at attracting foreign investment.

Otherwise, if you’re an evil foreigner, you get the book not only thrown at you, but re-written and then thrown at you.

It’s no wonder why Foreign Direct Investment into Korea continues to shrink.