I’m not worried. I’m buying more stocks on Monday to take advantage of the mini-collapse of last week and the pre-election jitters.

Anyway, while the official ratings knock Korea down the international pecking order a few notches when it comes to corruption, those of us working here know the overall reality does not flux as much as NGO ratings may suggest It’s just more insidious, dirty Korean politics in operation yet one more time.

In spite of the overall size of the Korean economy and the individual chaebols, Korean companies and their surrounding economy remain stifled in a sort of commercial adolescence. The chaebol refuse to grow up, as they try to hang on to past practices commonly found within developing economies.

I respect what the Prosecutor’s Office is often trying to do on behalf of the economy, but in the end I suspect macro economic forces ultimately force companies and their governments to come to age by forcing, for example, the chaebols to manage through greater transparency that will lead them, as a survival strategy, to be more efficient and competitive on the world stage. In a more mature environment, even the Enrons are ultimately disciplined.

At the same time, the Government needs to consistently enforce appropriate laws and regulations. There needs to be an ongoing review of the current laws to ensure that they are reasonable and not responsible by their nature to encourage poor compliance by the business community. In other words, Korea needs well legislated laws that encourage competitive business practices by companies with consistent and, when appropriate, strict enforcement of these laws by the Prosecutor’s Office.

Until then, judges will need to act, as we have seen in the past, by accommodating misbehavior in open recognition of the need to protect society’s overall wellbeing, while tacitly acknowledging that many of the laws and regulations are impractical. All of which in turn, encourages continuing corporate misbehaviors as we see being uncovered with Samsung today and someone else tomorrow.

Although it would be a major scandal in a serious Western country, what Samsung allegedly did is not something very unusual in the country.

With all the headlines in the local papers, it cannot possibly be thoroughly investigated. Believing otherwise is like expecting Italy to investigate the Mafia thoroughly and clean up the country in a short period of time.

I just hope the Western media would treat the case as low key as they would do when Korean girls win LPGA tournaments.

Not.

Korea, Inc., is still far too nationalistic. Also, Korea’s economic crisis in 1997 isn’t called “IMF” (to turn a pin on its head) for no reason - Koreans blame foreigners for their economy’s ills.

However, Japan had to suffer through an entire decade of stagnation, deflation, and falling property prices, which was far too long to simply blame on an outside force. Hence, much-needed and very painful economic reform took place in Japan as a result.

Alas, Korea has not yet learned its lesson, and I doubt it will from this one case.

However, Samsung is a profitable company with a nice cash flow, as Linkd said.

Samsung will not collapse. The Korean economy will not collapse.

So, the real question is what will be the outcome be ?

A) Some big headlines in the newspapers, Samsung and Samil PWC execs in pajamas with I.V. drips, a few slaps on the wrist “in the interests of the national economy” (대~~한민국 !!) and business as usual ?

OR

B) A real chance to make some meaningful and much-needed reform ?

Given Korea, Inc.’s history and especially the completely spineless “Great Pretender” Roh, I give 9:1 odds on the former over the latter.

Not at all. Bring it on, the sooner the better. Samsung and most of the major export conglomerates are good cash generators. You can hide a lot under Korea’s accounting standards, but you can’t hide top-line cash.

But what do these companies actually OWN? What is one of their stocks really WORTH, in terms of the value of the company’s assets that underlie the stock? Who the fuck knows, is the answer. That’s my guess for why Korea’s M&A market is non-existent. For M&A to take place, you need to appropriately value a company. Korea’s pathetic excuse for a (developed, modern) accounting industry doesn’t allow that.

So, yes, there should be a huge correction in stock prices if the books of Korea’s companies were actually rewritten according to higher standards of transparency, and some rearrangements in ownership would take place, but the cash earners would continue, and there are many of them. End of part II.