The Hanbo scandal (also known as Hanbogate
) refers to the late-1990s corruption involving senior South Korean government officials and top executives of the
Hanbo Steel (한보그룹) conglomerate, then South Korea’s second biggest steelmaker and 14th biggest conglomerate based on the book value of their assets.
The resulting scandal and trial of the first half of 1997 has been described as one of the largest ever scandals in South Korea.
History
Hanbo Steel received illegal preferential treatment from the government of Korean president
Kim Young-sam
Kim Young-sam (; or ; 20 December 1927 – 22 November 2015) was a South Korean politician and activist who served as the seventh president of South Korea from 1993 to 1998.
From 1961, he spent almost 30 years as one of the leaders of t ...
, primarily through loans issued by banks under pressure from bribed high ranking politicians and bankers.
Losses from corruption and bribes are estimated at US$6 billion.
Following a trial, by early June 1997 the company's founder, , was sentenced to be jailed 15 years. His son, Chung Bo Keun, was jailed for three years.
Eight other prominent figures, including former Home Minister
Kim Woo Suk, several presidential aides and parliament members, and two former presidents of
Korea First Bank were also handed sentences.
The son of the president, , was arrested in a related investigation
and sentenced to three years in October 1997.
Impact
The scandal is seen as having contributed to the Korean economic troubles of that time (see also
Asian financial crisis of 1997
The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998–1 ...
), exposing South Korean's economy weaknesses and corruption problems to the international financial community. Hanbo was also one of the first in a series of at least ten large South Korean conglomerate bankruptcies that occurred shortly afterward (involving major companies like
Kia Motors
Kia Corporation, commonly known as Kia (, ; formerly known as Kyungsung Precision Industry and Kia Motors Corporation), is a South Korean multinational automobile manufacturer headquartered in Seoul, South Korea. It is South Korea's second lar ...
and
Daewoo
Daewoo ( ; Hangul: , Hanja: , ; literally "great universe" and a portmanteau of "dae" meaning great, and the given name of founder and chairman Kim Woo-choong) also known as the Daewoo Group, was a major South Korean chaebol (type of conglomerat ...
; the latter also part of
a major corruption scandal).
The domino effect of collapsing large South Korean companies drove up interest rates and drove away international investors.
In domestic Korean politics, the son of Kim Young-sam's involvement in the scandal undermined his father's reforms and anti-corruption campaign.
References
{{reflist, 30em
1997 crimes in South Korea
Political scandals in South Korea
Corruption in South Korea
Chaebol
Kim Young-sam
1997 scandals