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Despite High-Profile Cases, Progress in South Korea's Anti-Corruption Fight

On February 5, Samsung chairman Lee Jae-yong, who had been accused of manipulating a merger of two subsidiaries to strengthen his power over the conglomerate, was acquitted of stock manipulation and accounting fraud charges. This has led  an array of political commentators to suggest that corruption risks at the senior levels remains endemic in South Korea. For instance, Park Sangin, economics professor at Seoul National University, said Lee's acquittal “will lead to lowering the confidence of foreign investors in the Korean legal system and the soundness of the Korean capital market.” 

Despite concerns over recent headline-grabbing cases, such as the pardons granted to former president Park Geun-hye and SK Group chairman Chey Tae-Won, South Korea has made progress tackling corruption in recent years, according to global surveys. The Anti-Corruption and Bribery Prohibition Act that took effect in 2016 and set rules on gifts of money, goods, and services to public officials appears to have made an impact. South Korea has improved or held steady in Transparency International's Corruption Perceptions Index for every year between 2016 and 2023. Indeed, the global NGO calls South Korea one of Asia-Pacific's countries with “stronger corruption control mechanisms.” Similar improvements over the same span were measured by the World Bank's Control of Corruption Index. 

Recent government data shows South Korea attracting increased levels of foreign direct investment, or FDI, with USD 32.7 billion worth of FDI commitments in 2023, compared with USD 30.4 billion in 2022. Advanced technology companies continue to make South Korea home. For instance, in December 2023, Dutch chipmaker ASML signed a USD 755 million deal to build a semiconductor research plant there.

South Korea can surely do more to fight corruption and corporate crime. But allegations involving the country's most powerful figures do not provide the complete picture of how corruption influences the investment climate in South Korea. 

Yoon Suk Yeol, South Korea’s former chief prosecutor who oversaw Lee and Park’s convictions, has since been elected the country’s president. Critics say the Yoon administration has been too lenient towards the country’s powerful family-run conglomerates. “This is a totally shocking verdict that may reflect the changes in the political atmosphere in the current Yoon administration,” said Park Sangin, economics professor at Seoul National University. “This will lead to lowering the confidence of foreign investors in the Korean legal system and the soundness of the Korean capital market.”