Too Many IT CEOs Face Investigations and Punishments
Switching from CEO to Chairman to Avoid Legal Risks
Joking About Criminal Records at Industry Gatherings
Handcuffs Photo by Yonhap News
In 2005, prosecutors indicted the top executives and key managers of approximately 40 organizations on the same charges, delivering the full force of the law. Twenty years later, in 2025, President Lee Jaemyung appointed two individuals who had been investigated and punished at that time as new ministers. They are Han Seongsook, Minister of SMEs and Startups, and Choi Hwiyeong, Minister of Culture, Sports and Tourism.
The people indicted at that time were the heads of major portals and internet sites, such as Naver and Daum. The charge was the posting and distribution of obscene materials. Minister Han was then the head of the search service division at Empas, a portal that no longer exists. The punishment she received was a fine of 10 million won and confiscation. Choi Hwiyeong, the current minister nominee who was investigated as the CEO of Naver at the time, said, "It was a long time ago, so I don't remember the details, but I clearly remember being very angry when I heard the results of the investigation." The reason for his anger was, "I went to the prosecutor's office as the CEO for questioning, so why was another employee punished?" The fact that the employee punished for the charge of distributing obscene material was an unmarried woman made Choi react even more emotionally.
At the 40 or so companies indicted at that time, things happened that seemed straight out of a gangster movie. Kim Yusik, CEO of DCInside, said, "I sent my friend and vice president this time, telling him, 'You go.'" It was a situation where the phrase "You go to Hawaii," like in the movies, could have been used, but the vice president went to the prosecutor's office without complaint. This was because CEO Kim had already represented the company at the police and prosecutor's offices several times. However, investigative agencies usually want to question the CEO directly.
Sometimes, those who resisted by asking, "Does the CEO really have to go?" ended up in trouble. Lee Haejin, founder of Naver and a leading figure in Korea's global IT industry, once ended up in a detention cell after not responding to a summons while he was CEO. In 2002, Gangnam Police Station summoned the CEO of Naver, alleging that the company had sold adult comics to minors. However, Naver sent a business manager instead of the CEO. The angry detective obtained a search and seizure warrant and thoroughly searched Naver, eventually putting then-CEO Lee Haejin in a detention cell when he finally arrived at the police station. A few years later, Lee stepped down as CEO and declared that he would work as chairman of the board. Since then, he has distanced himself from police stations and prosecutor's offices.
There is a saying that the main reason the chairman system, which is rarely seen overseas, has taken root in Korea's internet industry is because investigative agencies always look for the CEO. Lee Haejin of Naver, Kim Beomsoo of Kakao, Kwon Hyukbin of Smilegate... Successful Korean startup founders, almost as if by agreement, step down from the CEO position and become chairman of the board once they reach their late 30s. There are many reasons for internet industry CEOs and employees to be summoned, and the number keeps increasing: distribution of obscene materials online, disputes over game money, leakage of personal information, and more. Most recently, CEO Kim Yusik was summoned to the police station for allegedly aiding and abetting animal abuse. A photo of a fish being brutally dismembered was posted on DCInside, and someone reported it to the police.
The only consolation is that very few people actually serve prison sentences. Most receive fines. However, a fine is still a criminal penalty. Simply put, receiving a fine means having a criminal record. Illegal acts must be prevented. However, if this process leads to a mass production of people with criminal records, it is a problem. In the future, I hope that IT company CEOs will no longer joke over drinks about who has the most criminal records. Fines and other sanctions are sufficient if imposed on the corporation, not the individual. Steve Jobs stepped down as CEO of Apple in August 2011 due to health issues, became chairman of the board, and passed away in October of that year. I admire his sense of responsibility and passion for his work. At the same time, I wonder if Apple would have done the same if it were a Korean company and he were Korean.
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