A Contest of Wills That May Sink an Economy : South Korea: The richest man and novice politician made a lot of enemies during the presidential contest--and the winner wants to get even.

SEOUL, SOUTH KOREA — The aftermath of the Korean presidential election may be more portentous than its outcome. The problem is not the historic one of a military Establishment suspicious of civilian rule. Kim Young Sam, the winner and once implacable foe of generals in power, was the candidate of a political party led by a former general. Rather, the problem is vengeance against the third-place finisher.

During the campaign, Chung Ju Yung, Hyundai group founder and South Korea’s richest man, enraged the Establishment by questioning, often harshly, their integrity, their economic ability--even their brains. Chung, for example, frequently called Kim Young Sam a “stonehead.” Now, the new president, with the backing of an array of civilian bureaucrats and probably military leaders as well--is out to get Chung. And they have got a good case--an alleged “secret fund” of stolen money from one of Chung’s companies that he used to partly finance his campaign. Chung claims it’s all a mistake, that the fund was created with the proceeds of stock he had sold.

Yet, more is at stake than humiliating a 77-year-old by indicting him. Successful prosecution would result in Chung’s banishment from politics and that may add to existing tensions between the Establishment and the country’s business community, often critical of the government’s economic policies.

More important, the future of Korea’s chaebol, the big-business groups that dominate the economy and have been the engines of the South Korean “economic miracle,” might be drawn into the fray. The chaebol are under heavy fire for restraining economic growth by squeezing out small and medium-sized business, by smothering competition and discouraging the kind of creativity that Korea needs to move ahead in fields ranging from electronics to motor vehicles.

There is much talk now about the breakup of Hyundai. Chung fostered some of it by supporting the interests of small and medium-sized business during his campaign--and by divvying up the stock, along with some of the chairmanships and presidencies, of key entities in Hyundai among his six surviving sons.

The fear is that a government campaign against Hyundai would reduce its productivity and exports at a time when South Korea desperately needs to sell all it can to offset a trade deficit of more than $4 billion in 1992. Hyundai’s 1993 sales goal of $63.3 billion tops that of all the 50 or so chaebol --and is 19% above its ’92 sales of $53.2 billion, also No. 1 in South Korea. Its ’93 export goal of $9.3 billion would be 7.2% above last year’s performance, leading all the competition, including second-ranking Samsung, regarded as better managed than Hyundai.

The mandarins in the government bureaucracy claim no desire to single out Hyundai. Their purpose, they say, is to penalize Chung for having attempted to buy the presidency, for mingling political with business interests.

There is no doubt, however, that the campaign against Chung and Hyundai jibes with the long-held desire to go after the chaebol in general. The question is whether the bureaucrats will now turn the anti- chaebol drive into a personal vendetta that will fizzle as soon as Chung is shredded, politically, by a trial.

Chung assumed he could count on his company presidents to descend with him into the world of political dirty tricks. Such arrogance may be more obvious in Chung than in other chaebol leaders, but the fact is that all the chaebol are family operations dominated by one man, the founder or his chosen son. There is no possibility of an “outsider” gaining control, of a sell-off of shares that would result in a sell-out of a group or a company or the family that controls it. Groups are bonded by crossholdings and stocks often held under fictitious names, shielding them from inquisitive, much less jealous, contestants for ownership.

The case against Chung may expose some of the shenanigans of the Korean business world and its relationship to the power struggle, but it is unlikely to change the pattern. The question for Kim Young Sam is how far to pursue it before critics accuse him of seriously compromising the Korean economy.

Kim, who claims he has never owned a share of stock in anything, may find the political possibilities too tempting, though. He is often accused of having “sold out” to the government by merging his party with that of Roh Tae Woo, the current president, in 1990 for the purpose of getting himself elected president. He is viewed as bland, even weak, by many of his own supporters.

By attacking Chung and Korea’s biggest chaebol, Kim might reverse that image, becoming something of a hero . Still, it is an exercise in gamesmanship that could boomerang if carried too far.

Ironically, Chung could find sympathy where he would ordinarily least expect it--among members of the relatively “radical” Democratic Party. The party’s candidate, Kim Dae Jung, has shown no sympathy for Chung, who never uttered a word of support for him while angling for easy credit and other forms of government support in building up the Hyundai group. But after winning only 34% of the vote in the presidential election, Kim Dae Jung has quit the party and vowed to stay out of politics. That would make it easier for Chung’s party to find common cause with Kim Dae Jung’s successors against government “oppression.” Chung, who is fighting back by returning most of the “secret fund” by selling stock, sounds more and more the radical labor leader on strike against a Hyundai company in railing against government abuses.

But who is really the oppressor, who the oppressed? Chung was known as a domineering tycoon not averse to slapping errant company presidents--or one of his sons--if they dared disagree with him. Kim Young Sam was the “liberal,” on the side of the oppressed. Now the tables are turned--and Korea’s economy, as well as its largest business group, the employer of 173,000 people, may be the biggest loser in the end.