Lionel Mok asks whether public opinion is prompting judges to take a stricter approach to Korean bosses

For decades, it seemed that the founding families of Korea's large business conglomerates, or chaebols, could get away with anything.

In 2007, Hyundai Motor Group chairman Mong-koo Chung (pictured) was found guilty of breach of trust and embezzlement, while SK Group chairman Tae-won Chey was convicted of accounting fraud.

Both received suspended sentences, followed by presidential pardons. According to chaebul.com – a website that reports on the doings of Korea's wealthy – since 1990, seven of the heads of the 10 largest chaebols have collectively received 22 years in prison for various corruption and tax evasion charges, but all of those sentences were swiftly suspended by judges.

So the country was stunned last month when the Seoul Western District Court ordered Seung-youn Kim, chairman of Hanwha Group, to be quickly incarcerated after sentencing him to four years in jail and fining him $4.5m (£2.78m) on charges that he embezzled almost $264m (£164m) from the Seoul-based industrial business. Hanwha has said Kim will appeal.

The Korean legal establishment is still digesting what the surprisingly tough sentence means. Is it a blip? Or truly the end of leniency for high-level corporate crimes? "We have no idea because this decision came so suddenly," says Kyung-sin Park, a professor at Korea University Law School.

Park explains that the tradition of leniency for top business leaders stems from Korea's experience of rapid economic development through the 1960s and 1970s. During that time, the heads of chaebols were cast as heroes leading the Korean economy towards new-found prosperity.

But such treatment has become far more controversial in today's Korea, where chaebol founding families are now in their second and third generations of wealth, and inequality has become a major political issue.

The media has hammered away at chaebol scandal stories, and the public's increasingly negative perception of business elites was reflected in the box office success this spring of The Taste of Money, a film depicting the chaebol families as deceitful and corrupt.

Sang-Won Lee, a criminal law professor at Seoul National University, says judges may be getting the message: "The press have a lot of power to affect judges. So the press criticises the chaebols, and the judges are very sensitive to public opinion."

Kook-hyun Yoo, a senior lawyer in the white-collar defence practice group of Korean firm Kim & Chang, agrees: "There is a possibility that individual judges may get swayed by certain trends in the country."

Yoo says the court deciding Kim's case may also have been trying to adhere to the spirit of recently enacted sentencing guidelines that call for stiffer penalties for white collar crime.

According to Sang, both of Korea's major political parties – the ruling Saenuri Party and the opposition Democratic United Party – have been trying to score political points by getting tough on chaebol corruption. Still, the new sentencing guidelines are just guidelines. "Judges still have the authority to do what they want, and only need a written basis for a decision," says John Kim, a defence lawyer with Seoul's Lee & Ko.
Korean lawyers say another pending case may show whether courts have definitively turned against the chaebol bosses – SK's Chey and his younger brother and vice-chairman Jae-won Chey are both currently on trial for embezzlement, with the Seoul Central District Court expected to reach a verdict by early October. The Cheys have pleaded not guilty.

Sang thinks tougher sentences will mean that "prosecutors will be encouraged to more zealously go after big enterprises and their executives". But defence lawyers will have to change their approach to representing white collar clients, notes Yoo.

Lawyers will have to concentrate "on both the substantive legal defence and coming up with specific and convincing extenuating circumstances, rather than simply describing generally how the client contributes to economic development", he says.

A boom for defence lawyers may not last long, though, according to Sang: "If stricter sentences become the standard, there will be little room for the lawyers to work. So the income of the particular case might be lower."

And Sang has concerns about tough punishments becoming the norm: "This case might have been influenced by the opinion of the public so much that the sentence might be too high compared to the sentences in the past. I am afraid that the judges might become too sensitive to public opinion."

This article first appeared in The Asian Lawyer, an affiliate title of Legal Week.