Lee Hye-hoon, a member of the Saenuri Party’s supreme council

Why Lee’s anti-chaebol rhetoric for economic justice should be taken seriously

By Kim Da-ye

People who pay even scant attention to politics are likely to remember a woman with short curly hair wearing glasses frequently standing next to presidential hopeful Park Geun-hye.

For those in the financial industry, this woman is a force to be reckoned with.

She is Lee Hye-hoon, a member of the ruling Saenuri Party’s supreme council and a former National Assembly representative. Lee is known to be one of key politicians very close to Park and an expert in economics.

As the presidential election in December approaches and Park’s popularity strengthens amid an ongoing ideological battle in the National Assembly, Lee’s potential role in the shaping of Park’s economic policies is worth paying attention to, according to observers.

“There is much talk in political circles that Lee would play an important role in economic policy making if Park is elected,” one source close to Lee said.

Chaebol fighter

Lee doesn’t shy away from openly talking about her economic stance even if her targets are the nation’s biggest economic powers. Nowadays, her main interest seems to be reforming of the chaebol, Korea’s family-controlled conglomerates.

“We have a structural problem in which the chaebol enjoy the fruits of the country’s economic growth but small- and medium-sized enterprises and ordinary people do not,” Lee said in a phone interview.

“The key to solving this problem is reforming the chaebol’s unfair, unjust business activities. We cannot talk about economic justice without tackling the injustice and unfairness caused by chaebol.”

Korean politicians are accustomed to splitting into opposing camps over ideological stances but judging by her parliamentary activities, Lee is not typically right or left wing.

“She is faithful to the basics of capitalism and she has called for a so-called democratization of the economy. I would call her a healthy conservative,” the source close to Lee said.

When the former lawmaker decided to run for the party leadership, she told reporters that she will help achieve “democratization of the economy.” That is very much in line with the direction Park Geun-hye is moving toward.

Kim Kwang-doo, professor of economics at Sogang University and the head of Park’s think tank, told Maeil Business Newspaper that Park’s philosophy is capitalism underpinned with principles that control “excessive greed.” A key word of the philosophy is fair competition.

Lee’s advocacy of fairness, however, has been poorly received by the financial industry.

She took a lead role in creating a revision to the securities trading law by adding transaction taxes for derivatives.

When shareholders sell their stocks, they have to pay a portion of the sales in transaction tax. However, they do not for sales of derivatives. Korea’s exchange-traded derivative market has grown into the world’s largest by turnover in the relatively free environment.

Lee’s logic is that every financial product needs to be taxed fairly and equally. The securities sector has been strongly against the proposed revision that hasn’t been signed into law. They fear that transaction taxes would hike trading costs and deter investors from investing in Korea’s exchange, eventually killing the market.

“Being in the financial industry, I would worry about it,” said an employee of a financial company, when asked about Lee’s potential role in the event of Park’s victory in the presidential election.

Last year when tax exemption regarding sukuk, Islamic bonds, became a subject of controversy, Lee was one of the strong opponents against it.

Because Islam does not allow usury, sukuk pays out profits from managing tangible assets as a sort of dividend.

Acquisition and registration of a piece of real estate, for instance, incurs a huge amount of taxes, and in countries that practice Islamic financing, those taxes are waved to assure the profitability of sukuks.

The Ministry of Strategy and Finance of Korea wanted such tax exemptions to attract investment from the Middle East and other Muslim-majority countries.

Lee’s main argument in opposing the tax exemptions was preferential treatment given for the Islamic bonds — and in other words, a lack of fairness.

Some in the financial sector, especially those who had expected to expand their businesses into Islamic financing, didn’t buy her argument.

In their eyes, she was a devout Christian who did not want any influence of Islam in Korea.

Loyalist

In this year’s general election held in April, Lee did not win the party’s nomination. She instead helped the party’s campaign by being head of the all-source situation room in the Saenuri Party’s election task force.

After the Saenuri Party’s victory, Lee ran for the party chief position and won the second most votes at the May 15 National Convention after Saenuri Chairman Hwang Woo-yeo, becoming a member of the supreme council.

“At the national convention, Lee came second in the race for the party leader. That means she has been approved and is highly regarded by the party,” a political analyst who requested anonymity said.

The analyst said that because she is not National Assembly representative, she cannot create and submit bills on her own but can play an important role in deciding the direction of the party’s policymaking.

The Saenuri Party’s press office refused to discuss Lee’s role in the party in detail apart from the fact that she is on the supreme council. “Of course, we do not comment on individual members,” the press office said.

More importantly, Lee is one of a few renowned Park Geun-hye loyalists. She graduated from Seoul National University with a degree in economics and earned a doctorate in the same subject from the University of California, Los Angeles.

She was a research fellow at the Korea Development Institute, and worked as Park’s spokesperson in 2007 when the daughter of late former President Park Chung-hee ran for the country’s top job.

When Lee was elected a member of the National Assembly representing the Seocho district, a relatively wealthy neighborhood in southern Seoul, she served on the Assembly Strategy and Finance Committee.

“There aren’t that many economic experts in Park’s circle,” the political analyst said.

Another politician close to the presidential hopeful and specialized in economic issues is Lee Hahn-koo, the current floor leader of the Saenuri Party.

Not only is the four-term lawmaker known as an advisor to Park on the economy, but also he is a member of Park’s think tank, the National Future Institute. Lee Hye-hoon is not.

The think tank consists mostly of scholars and industry experts. Among the institute’s economic experts, Lee Han-koo is the only lawmaker currently serving in the National Assembly.

Lee Hye-hoon told The Korea Times that she currently tries to build consensus within the party on the economic issues she has addressed so that effective measures are signed into laws.

“And I will devote myself to help the Saenuri Party win the presidential election. Once a new administration is formed, I will do my best to achieve economic justice, democratization of the economy and reformation of the chaebol in the new government,” Lee said.