Updated May.8,2007 11:53 KST

Police Probe Mob Involvement in Hanhwa Boss Scandal

Police suspect real gangsters were involved in a mafia-style punishment allegedly meted out by Hanwha chairman Kim Seung-youn. "We’re investigating a clue that a certain Oh, the operation chief of the Sobang-pa crime syndicate, took part in the incident," a Seoul Metropolitan Police official said on Monday. Oh is suspected of taking part in two of three separate assaults that took place at Mt. Cheonggye, a karaoke bar in Cheongdam-dong and a bar in Bukchang-dong on March 8.

Oh reportedly went abroad on April 27. The police are looking for a third person who asked Oh to participate in the incident, the officer said. Police are investigating a tip-off that Oh, on the day when the alleged mafia-style punishment took place, was with a Hanhwa employee at a restaurant in Gangnam in southern Seoul run by a member of Sobang-pa syndicate. Police suspect that the bodyguards who accompanied chairman Kim on the day of the incident were Oh's men.


A bar in Bukchang-dong, central Seoul, which police investigated in their probe of an alleged mafia-style punishment meted out by Hanwha chairman Kim Seung-youn.

According to witnesses, when Kim on March 8 decided to punish a group of bar workers who had earlier that night quarreled with his son, he was accompanied by some 17 heavies. The investigation so far suggests that the gang called five staffers of a Bukchang-dong bar to the karaoke bar in Cheongdam-dong, where Kim's son and Bukchang-dong bar staffers had had a fight, and bundled them into cars and took them to a building site in Mt. Cheonggye. There the gangsters allegedly threatened and assaulted the victims with steel pipes and tasers. Their threats, such as "Your wrists will be chopped off" and "You will be buried alive" had a peculiar mafia-style ring to them, witnesses said.

Police believe Kim and the gangsters drove from Mt. Cheonggye to the Bukchang-dong bar around midnight that day. Kim senior and junior and some of the gangsters entered the bar while a dozen or so were deployed as lookouts in nearby alleys, according to witnesses. The men were seen covering an object that looked like a knife with a towel, a witness said. When the chairman and his heavies appeared, the outnumbered bar staff knelt on the floor and were assaulted.


Meanwhile, the scandal has led to battle of wills between police and Korea’s 10th largest conglomerate after application for an arrest warrant for Kim was delayed due to police failure to secure evidence. National Police Agency chief investigator Kang Hee-rak criticized the Hanwha Group at a press briefing. He named a Hanwha group executive also called Kim (51), chairman Kim's chief secretary, plus the president of a contractor of the same surname who is said to have been at the site of the incident after a phone call from the executive, as well a friends of the chairman’s son identified as Lee (22), and challenged them to explain why they went underground if they were innocent. "If it is established in the investigation that others helped the suspects escape, they will be ferreted out and punished according to the law," Kang warned.


The Hanwha Group professed outrage. "Senior police officers are strange people," said the group’s vice president in charge of management and planning. "Having neither issued a summons nor requested his appearance by telephone, the police are telling the media that (the executive Kim) has escaped." The president of the contractor, who voluntarily went to the police and was questioned Monday evening, also said he had received no request to present himself for questioning.

Meanwhile, the Hanwha group on Monday filed for an injunction with the Seoul Southern District Court against a planned KBS special on the scandal in its flagship current affairs series. The program is scheduled to air on Wednesday evening.

(englishnews@chosun.com )

The chairman of a South Korean conglomerate faces assault charges
International Herald Tribune, Published: May 24, 2007


SEOUL: In an abandoned building site on the night of March 8, the chairman of a South Korean conglomerate, flanked by bodyguards and hired thugs, bashed four cowering nightclub workers with fists, a stun baton and a steel pipe, the police say.

Later, according to the police, he drove to a bar in downtown Seoul where, as he and bodyguards watched, he let his son beat a man up in an eye-for-eye revenge for an earlier assault on the son.

Now, Kim Seung Youn, chairman of Hanwha, South Korea’s ninth-largest conglomerate, languishes in jail, having become the latest in a parade of prominent South Koreans, from presidents to tycoons, whose reputations have been besmirched because of what Koreans lament as “excessive parental love of children.”

From President Roh Moo Hyun to taxi drivers in Seoul, South Koreans called for a thorough investigation of the case, all the more so because it involved one of the country’s chaebol - family-controlled conglomerates - whose uncurtailed power has raised eyebrows in a country more ready than ever to scrutinize its rich and powerful.

“I hope there will never be a foolish father like me again,” Kim, 55, said in a news conference shortly before his arrest May 12.

Kim, a dapper businessman with trademark slicked-back hair, was reduced to slurping $2.70 meals and sharing a TV set with petty-crime suspects in a police lockup, while officers fine-tuned six charges of assault, abduction and confinement against Kim and 23 other men, including his chief bodyguard, who was arrested, and his son, a Yale University student.

The son has not been arrested, because he was also a victim, both the police and Hanwha officials said. The bar worker who allegedly beat him was not arrested either.

Kim, handcuffed, was transferred last Thursday to prosecutors’ custody for indictment. In South Korea, an arrest is made only with a judge’s approval and almost always leads to indictment and trial.

Korean parents have been known to take their dedication to their children’s well-being to extraordinary, and sometimes illegal, lengths. Widespread among parents until recently was the practice of giving schoolteachers envelopes containing bribes - euphemistically called chonji, or “a token of appreciation as humbly small as a finger joint” - to ensure that their children are treated properly at school.

Such an attitude, social commentators say, may explain why two successive presidents of South Korea, Kim Young Sam and the Nobel Peace Prize laureate Kim Dae Jung, were both humiliated toward the end of their terms because of their sons.

A son of Kim Young Sam went to jail for bribery. All three sons of Kim Dae Jung were convicted of crimes. Ordinary South Koreans lamented that even the visionaries who made fighting corruption a cornerstone of their rule lose their wits when it comes to coddling their wayward children.

In the corporate world, top executives at Samsung and Hyundai, the two biggest members of about three dozen conglomerates classified as chaebol, are fighting criminal charges in court that stem from the fathers’ alleged attempts to bequeath their companies’ wealth illegally to their sons.

Kim’s case “shows that some of the rational mechanism of a modern society remains crippled in South Korea,” said Cho Hae Joang, a sociologist at Yonsei University in Seoul. “Problems that must be dealt with through public means are handled through unofficial, private and family networks.”

While some observers dismiss it as a case of a fatherly love gone wrong, critics say Kim’s alleged crime reflects an entrenched problem in corporate Korea: a top down, command-and-compliance culture pervasive at South Korean conglomerates. The critics say that dictatorial whims of the “owner families” often go unchecked.

When a chaebol tycoon returns home from an overseas trip, a throng of executives and bodyguards greets him at the airport with a deep, collective bow - a scene people often associate with an Asian crime gang.

Last week, Lee Taek Soon, the national police chief, called Kim’s arrest “proof that law and justice are alive and kicking” in South Korea. For years, South Koreans have complained that prosecutors and judges do not punish convicted chaebol chairmen harshly enough, citing their “contribution to the economy.”

Chaebol, which means “rich clans,” spearheaded South Korea’s rise from the ashes of the 1950-53 Korean War to become the world’s 11th-largest economy. Today, a South Korean housewife may live in a Hyundai apartment, drive a Hyundai car, fill up at a Hyundai gas station, pay the bill with a Hyundai credit card and shop in a Hyundai department store.

Samsung, the largest chaebol, generates 20 percent of the country’s total exports, selling everything from semiconductors to supertankers.

But the chaebol road to wealth and power was paved with corrupt deals with politicians, brutal suppression of labor, allegations of opaque bookkeeping and extortion of parts suppliers, and tales of ashtray-hurling “one-man dictatorship” at corporate boardrooms.

Even if Kim is convicted, few doubt that he and his family will keep a tight control on his corporate empire, which includes the country’s second-largest life insurer, chemical and construction companies, hotels and a professional baseball team.

A typical chaebol family controls its empire with interlocking subsidiaries through cross-share holdings and by installing yes-man executives known as kasin, or “vassals,” as chief executives.

During a parliamentary hearing in 1997, Chung Tae Soo, a chairman of the bankrupt Hanbo Steel Group, who was imprisoned for bribery, said about his executives: “What do they know about the master? They are just servants.”

Kim’s case “revealed the backwardness of corporate governance at Hanwha and Korean chaebol in general,” said Kim Sang Jo, director at Solidarity for Economic Reform, a civic watchdog on big businesses. “All this results from emperor-like management style of chaebol chairmen.”

Kim Seung Youn’s trouble started on March 8, when his 22-year-old son, Dong Won, fell while scuffling with off-duty nightclub workers outside a karaoke pub and returned home with a facial injury that required many stitches.

The senior Kim - described by South Korean media as an entrepreneur long in charisma and business acumen, especially in mergers and acquisitions, but short in temper - went out looking for his son’s attackers.

He brought along with him the son, several Hanwha bodyguards and, the police said, at least one organized crime boss along with 11 “outside men” mobilized through Hanwha subsidiaries.

What followed has been the talk of the city. News media carried sensational details, some unconfirmed, of Kim’s alleged violence in front-page news for days in a row. Commentaries called Hanwha an “organized crime chaebol” or “Han-whack.”

Hanwha, a household name here, is short for “Korea Explosives.”

One news channel showed footage of Kim with the theme song from the American mobster movie “The Godfather” playing in the background.

“You beat him too!” the police quoted the father as telling his son when they found the son’s main attacker.

The case came to light only in late April after rumors spread through the Internet and some of the alleged victims talked to media. Kim at first denied any violence. He wanted his son, rather than taking the matter to the police, like a wimp, to “get an apology like a man,” Hanwha officials told media.

As the media hounded him and more witnesses stepped forward, however, Kim later admitted that he and his son had attacked the victims. But he denies using weapons, hiring gangsters, and taking the victims to a hillside construction site for a mob attack. These are serious charges that, if upheld in court, could lead to a lengthy prison term.

“The incident is the chairman’s personal problem,” said Ju Cheol Beom, a Hanwha spokesman. “But we are worried that it is hurting the brand image of our group.”

All the six alleged victims have agreed to accept financial compensation from Kim, said Choi Young Jo, a Hanwha vice president.

Choi declined to give further details. Such financial agreements are usually taken into account when a court gives a verdict on similar cases.

'Sick' Hanwha Chairman in Appeals Trial

Hanwha group chairman Kim Seung-youn on Tuesday appeared in court for his appeal against a month-old jail sentence over his role in a mafia-style revenge attack on a group of men who had quarreled with his son. Looking pale and ill, Kim, who now sports a bushy beard, entered the courtroom in a wheelchair and was helped to the dock by prison officers.

Counsel for Kim indicated among grounds for appeal that the chairman had trouble moving his left leg and his health had deteriorated since he was sentenced to jail at first instance to the point where he cannot get around without a wheelchair. He asked the judge for leniency, saying Kim did not plan the revenge attack but was unable to contain his anger.

Kim told the court he took up to 27 sleeping pills at a time to get to sleep. His lawyer added that dose could be fatal but sometimes failed to work. The chairman’s defense called a psychiatrist at Aju University Hospital and Hanwha Group vice chairman Sung Ha-yeon to give evidence and submitted a request to the court for a stay of execution.


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