4 S. Korean Tycoons Get Prison in Bribery Case

Four South Korean tycoons, including the chairman of the colossal Daewoo Group, drew prison sentences of up to 2 1/2 years for bribing former President Roh Tae Woo, while the heads of five other conglomerates received suspended sentences in a harsh finale Monday to this nation’s massive corruption trials.

The sentences rocked the business community here because the industrial barons had been seen as far too crucial to South Korea’s economic juggernaut to be allowed to languish in jail. Many predicted that President Kim Young Sam will soon pardon them.

The stiffer-than-expected sentences came on the heels of a death sentence for disgraced former President Chun Doo Hwan and a 22 1/2-year term for Roh, his childhood friend and political successor.

In addition to the businessmen, nine former senior government officials also were sentenced to prison for up to seven years for crimes such as money laundering, bribe brokering and passing illicit payments to the two former presidents--who, together, were convicted of taking a total of $631 million.

Among those sentenced were individuals who had served as finance minister, minister of trade and industry and the heads of the national tax and national security offices.

The nine convicted tycoons are among South Korea’s most powerful, including Samsung Group Chairman Lee Kun Hee, who received a suspended sentence. All admitted giving money to Roh but insisted the sums were not bribes but “donations,” which they said were customary at the time.

President Kim appears to be concerned that the prosecution of the key business leaders will further damage an economy already suffering from slowing growth, increasing inflation and a sagging stock market.

In January, he went so far as to invite some of the accused to a dinner that a spokesman said was intended to encourage business leaders dispirited by the president’s campaign to “right the wrongs of history.”

South Korean newspapers reported today that even government bureaucrats were expressing concern that the sentences could drag down the economy, reduce exports or deter foreign investment.

Some business people were horrified. “The verdicts are shocking,” said Shim In, a spokesman for the Korean Federation of Industries, which represents the conglomerates, or chaebols. “This will gravely affect Korean business activities overseas. It will also hurt the morale of the business community.”

For now, the tycoons are all free pending appeal; a Daewoo spokesman said they must obtain court permission to travel overseas while pursuing their global business interests. Daewoo Group Chairman Kim Woo Choong--sentenced to two years for giving Roh $19 million--is supposed to break ground on a hotel project in China soon, and Dong Ah Group Chairman Choi Won Suk, sentenced to 2 1/2 years, was scheduled to fly to Libya this weekend, the Korea Herald reported.

The other two tycoons given prison sentences were Jimro Group Chairman Chang Jin Ho and Hanbo Group Chairman Chung Tae Soo, both of whom drew two-year terms.

Even if the businessmen are eventually pardoned, the convictions taint the reputations of companies that have helped lift South Korea from poverty to one of the world’s most formidable economies in just three decades.

Meanwhile, some analysts said President Kim appears to be tempering his campaign pledge to root out entrenched corruption. They noted that, with elections looming, he may be confronting the political reality that he cannot mete out harsh punishments. Just two weeks ago, Kim ordered a special amnesty for 11 other senior officials and industrialists convicted on corruption charges; five others, released from jail last year, had their civil rights restored.

He has pardoned almost every important official convicted under his vaunted anti-corruption drive.

Analysts said it is unclear if the historic trials will succeed in rooting out the Korean tradition of “collusive ties between politics and business,” as a prosecutor put it.

Although the government promises deregulation, bureaucrats and politicians still exercise sweeping rule over economic life here and, thus, are in a singular position to demand money--whether campaign contributions, payoffs or bribes--in exchange for favors, analysts said.

The old political culture has been declared illegal, one businessman said, speaking privately, but there is as yet no new one to replace it. “It is possible” to do business in South Korea without making payments to influential people, the businessmen said, “but you have a high chance of going bankrupt.”

On the political side, the verdicts are creating similar uncertainty. For example, presidential elections are scheduled for December, but no one has yet figured out the mechanics of conducting a campaign within legal spending limits, analysts said.

Chi Jung Nam of the Times’ Seoul Bureau contributed to this report.