South Korean Politics and Elections

Lee Myung-bak’s cancellation of meeting with labor organization causes uproar

Labor groups face growing anxiety over president-elect’s potential disregard for labor community

Hankyoreh, January 29, 2008

President-elect Lee Myung-bak has unilaterally scrapped a plan to meet with representatives of the Korean Confederation of Trade Unions, one of the nation’s two major umbrella labor organizations. The president-elect’s spokesman says the reason for the cancellation is tied to a disagreement between the president-elect’s transition team and the KCTU about a police investigation of the KCTU leader, saying that it is a matter of “law and order.” The move is seen by many as being typical of Lee’s desire to conduct labor-politics relations based on power, rather than gathering opinions from the labor community or trying to form peaceful labor-management relations. Meanwhile, labor groups and civic organizations are facing growing anxiety over possible conflicts and distrust between the labor community and the incoming administration.

On January 28, Joo Ho-young, Lee’s spokesman, said, “A planned meting with the KCTU was postponed indefinitely because of a disagreement about a police investigation of the KCTU leader.” Ahead of the meeting, Lee’s transition team had requested that Lee Seok-haeng, the leader of the KCTU, be called in for questioning by police about demonstrations that took place last year in protest against free trade negotiations with the United States. “More consultations with the KCTU are needed so that law and order can be maintained in labor-management relations,” Joo added.

A transition team official said, “If Lee, the KCTU leader, agrees to be questioned by the police, the meeting will be arranged again.”

The meeting was scheduled to take place on January 29 at the KCTU’s main office. At the meeting, the KCTU was planning to raise a number of issues, including discrimination against non-regular workers, social polarization and opposition to the incoming administration’s plans to privatize public companies.

In a hastily arranged press conference on January 28, the KCTU leader strongly criticized the president-elect for having canceled the meeting, saying, “The meeting was scrapped after discussions about protocol were completed. This indicates that the incoming administration is aiming to return to the authoritarian rule of the past in which workers’ rights were disregarded. It is unfortunate that the KCTU isn’t treated with as much importance as the alumni association of Korea University,” the leader said. The President-elect is a graduate of Korea University and has frequently participated in alumni association meetings. “We will take hostile countermeasures against this attempt to dismiss the KCTU,” the KCTU leader said.

According to a document outlining the planned meeting between the president-elect and the KCTU, written by the transition team and disclosed by the labor organization, discussion on a set of procedures for how the meeting was to be conducted was deadlocked on January 25, when the transition team demanded that the KCTU leader respond to a police summons.

Woo Moon-sook, a spokesperson for KCTU, said, “Simply summoning the KCTU leader to the police station for questioning is just an excuse, when the president-elect himself has not responded to a summons by special prosecutors. It’s an unacceptable attitude,” Woo said. The president-elect has been under investigation by specially-appointed independent counsel over allegations that he was involved in stock price manipulation in collaboration with his former business partner, as well as a number of other charges.

Meanwhile, the Federation of Korean Trade Unions, a more conservative umbrella labor organization, expressed concern over the cancellation, calling it “unfortunate.” A statement released by the FKTU said: “Given the new administration’s initiatives to revitalize the economy, it is inappropriate for the incoming administration to refuse to hold discussions with the labor community.”

Park Won-seok, an official from the People’s Solidarity for Participatory Democracy, an advocacy group, said, “While President-elect Lee has criticized the peer-to-peer politics of the participatory government (of President Roh Moo-hyun), this cancellation clarifies his will to run the nation solely for the benefit of his supporters.”

In a statement, the Korea Progressive Alliance said: “This is an unfair act because (President-elect Lee) has raised questions about the activities of the KCTU leader, who supported irregular workers at E-Land, while pledging to keep in touch with chaebol owners who have committed crimes.” The E-land dispute occurred last summer before a new labor law was to take effect. The impending implementation of the law, which the government said had been designed to protect temporary workers and provide them with permanent employment after a period of two years, spurred companies to instead lay off thousands of workers in advance of the implementation of the new law on July 1. KCTU was involved in supporting the striking workers, most whom were employed as cashiers.

Kim Dong-won, a professor of business at Korea University, said, “The cancellation may represent the president-elect’s desire to press or dismiss the hard-line KCTU, while embracing the (more moderate) FKTU, which has formed a policy alliance with the transition team. If he sticks with this attitude, harsh confrontations with the labor community will be inevitable.”

Lee Ji-ahn, a deputy spokesperson for the Democratic Labor Party, said, “There are no laborers in the President-elect’s ‘business-friendly’ policies. The administrator of national policy is inciting a labor-management dispute, rather than resolving it.”

Please direct questions or comments to [englishhani@hani.co.kr]

Former Blue House aide offered bribe by Samsung Group

New allegations provide proof of how far conglomerate’s bribery operation went, civic groups say

Hankyoreh, November 20, 2007

A former presidential aide for legal affairs revealed that Samsung Group gave him 5 million won (US$5,400) in cash in January 2004, when he was working for Cheong Wa Dae, or the presidential office otherwise known as the Blue House, but he disclosed that he returned the money to Samsung immediately.

The press conference, in which former presidential aide Lee Yong-chul, 47, launched the latest allegations against Samsung Group, was organized by a coalition of some 60 civic organizations under the name “National Movement to Find Irregularities of Samsung Chairman Lee Kun-hee.” The coalition includes Lawyers for a Democratic Society and People’s Solidarity for Participatory Democracy, which filed a criminal lawsuit last week against Samsung Chairman Lee and other high-ranking Samsung executives for maintaining slush funds and bribing prosecutors, judges and senior government officials.

Lee’s revelation is gaining attention because it provides additional evidence to support allegations by Kim Yong-cheol, a former chief attorney at Samsung who accused the nation’s largest conglomerate and its chairman of bribing senior prosecutors, politicians and government officials with 5 million to 20 million won each.

In a statement to the coalition, the former presidential aide said, “After I became an aide for legal affairs at Cheong Wa Dae in late 2003 or early 2004, Lee Kyung-hoon, a lawyer from Samsung Electronics’ legal department telephoned me. A little later, I had lunch with him because I had already made his acquaintance. When I met him, Lee asked me whether it would be alright for his company to send me a gift for the Lunar New Year holiday season. I answered ‘okay’ because I thought that it would just be an ordinary gift.”

Lee explained that he came to know Lee Kyung-hoon after he met him in 1996, when he served as a lawyer for the residents of Samsung Apartments in Changdong in the northern part of Seoul. The residents had filed suit for noise and shaking against Samsung Corporation, the builder of a building under construction near the apartment complex. Lee Kyung-hoon worked for Samsung Corporation as a defense lawyer.

On January 16, 2004, Lee Yong-chul was notified by the law firm where he had worked prior to his appointment to the Blue House legal team that a present had arrived. On January 26, the present was delivered to his home. When he opened the gift box, which was packed like a book, he found cash.

“I decided to return the money after taking pictures of it as evidence, because if I had revealed the case at that time, it would have hidden Samsung’s trace of bribery,” Lee said. Lee confessed that he had no courage to fight Samsung alone at the time.

At the press conference, the coalition unveiled the photos of the gift box, which depict five bundles of cash worth one million won each and a document showing who delivered the gift and when. The photos also show that Lee Kyung-hoon’s Samsung Electronics business card was affixed to the box and that there was a Post-it note with the words, “Lee Yong-chul (5),” attached to the wrapping covering the stack of cash.

“In late January, I told Lee Kyung-hoon that I would return the money. And Lee Kyung-hoon said he had no idea that the company would send cash for a gift. Lee Kyung-hoon apologized for several times,” the former presidential aide said.

Lee Yong-chul served as a special legal advisor for then presidential candidate Roh Moo-hyun in November 2002. After Roh was elected, Lee was appointed presidential secretary for public affairs between September and December 2003 and presidential secretary for legal affairs between December 2003 and January 2005. Lee served his final public post as deputy chief of the Defense Acquisition Program Administration until November 2006.

The coalition said, “The revelation by Lee is another piece of solid proof that Kim Yong-cheol’s confession of conscience was not just a claim, but a fact. It also shows that Samsung’s control has reached beyond the prosecution to the center of government power.

“In order to conduct a thorough investigation, we again appeal to lawmakers to enact a law instituting an independent counsel before the regular parliamentary session ends,” they said.

A high-ranking executive at Samsung Group said, “Lee Kyung-hoon, the lawyer who was said to have given money to Lee, the former presidential aide, retired from the company in June 2004 and is now in the U.S.” He added, “At present, we can’t know the exact facts because we don’t have contact with Lee Kyung-hoon.”

In addition, Samsung Electronics said, “After our internal investigation, we have concluded that the company did not make such order.”

Please direct questions or comments to [englishhani@hani.co.kr]

Civic groups file complaint against Samsung

List of irregularities includes managerial rights transfer, illegal lobbying, borrowed-name accounts and slush funds

Hankyoreh, November 7, 2007

Civic and lawyers’ groups on November 6 filed a complaint against Samsung Group Chairman Lee Kun-hee and other executives of the nation’s largest conglomerate, demanding that the prosecution investigate allegations of embezzlement, bribery and other irregularities. Woori Bank and Goodmorning Shinhan Securities officials were also sued for violating the real-name-account law.

According to the civic advocacy groups People’s Solidarity for Participatory Democracy and Lawyers for a Democratic Society, Samsung was involved in irregularities concerning the transfer of its managerial rights to Chairman Lee’s son, Lee Jae-yong; has created illegal slush funds; has unlawfully lobbied prosecutors, tax officials, and financial policymakers; and has opened borrowed-name accounts.

The written complaint contained various allegations against Samsung in connection with the property of Lee Jae-yong. Chairman Lee and Samsung executives used illegal stock and convertible bond trades to increase the wealth of the chairman’s son, even though they knew such trades would result in losses to Samsung affiliates, according to the document.

At a press conference held before the complaint was submitted, LDS Chairman Baek Seung-heon said, “Civic groups, including PSPD, had already raised these allegations but the prosecution has denied them, citing a lack of evidence. However, the lawyer Kim Yong-cheol, who once worked at Samsung’s financial and legal departments, was involved in the incidents in connection with Jae-yong.”

With regard to this, Kim said, in a telephone interview with The Hankyoreh, “All of these things were done to increase Jae-yong’s wealth and to transfer managerial rights to him. I have the inside documents to prove it and I will disclose them to the prosecution.”

Kim Min-yeong, PSPD secretary-general, urged the prosecution to launch a complete investigation into the allegations. The prosecution should be reborn through this investigation, added Kim.

In response, Samsung Group issued a statement denying all allegations, claiming that Kim started the incident to retaliate against Samsung. Samsung, however, has said it would cope with the investigation in earnest.

“At a time when we should spare no effort to overcome the ever-worsening business environment, we are wasting our energy on unproductive and exhausting disputes,” the Samsung statement said.

Please direct questions or comments to [englishhani@hani.co.kr]

Labor, management spar over next year's minimum wage

Hankyoreh, May 31, 2007

On May 30, both labor and management unveiled their respective demands for next year's salary growth, showing a wide gap between the two parties on the issue. Two of the nation's umbrella labor groups called for a 29-percent rise in the minimum wage by next year, while management said it wanted to freeze the minimum wage at its current level.

The nation's two umbrella labor groups, the People's Solidarity for Participatory Democracy and up to 20 other civic groups held a joint press conference on May 30 and called on management to raise the level of minimum monthly salary to 936,320 won (US$1,007), or about half the nation's average monthly salary of 1.87 million won. This would spell a rise in the current minimum hourly salary of 3,480 won to 4,480 won.

"The minimum monthly salary of 720,000 won applied this year represents only 25 percent of 2.88 million won that an average three-member family spends to live," the labor groups said in a statement.

Management circles, by contrast, have proposed to freeze the minimum salary at its current level. The no-growth proposal is the first since the 1997-98 financial crisis.

"The sharp increases in minimum salary for the past seven years have been increasing the burden on small and medium-sized enterprises," the Korea Employers Federation said on May 30, adding that the current salary is an adequate living wage for a one-member family.

A civic group dealing with the issue of maintaining an appropriate minimum wage, however, refuted, "With a growing number of irregular workers, a proper level of minimum income becomes more important."

Under current law, the minimum wage only applies to certain workers. Taxi drivers are paid on a merit-based system outside of the minimum wage guarantee, for example, and the disabled - deemed to have lower productivity levels by the government - are also excluded from minimum wage legal protections. Building guards, paid interns, and other trained laborers were included under the minimum wage system only since March of last year. In addition, some firms have hired non-regular workers at illegally low wages.

According to government statistics, as of August last year, 9.4 percent of the nation's total employees - or 1.44 million people - were not receiving the minimum wage of 3,100 won/hour. At that time, 1.36 million, or 94 percent of these workers were on part-time or short-term contracts.

Labor unions have long demanded that the minimum wage be applied to all workers.

The governmental Minimum Wage Council is set to determine the minimum wage for next year by June 28. The council consists of members of government agencies as well as 27 members from labor, management, and a neutral sector consisting of professors, lawyers, and others.

Please direct questions or comments to [englishhani@hani.co.kr]