The death sentence handed out to former President Chun Doo-hwan and prison terms for his successor Roh Tae-woo and several business leaders may have helped cleansed one of South Korea's darkest chapters.
But the price could be increased uncertainty for an economy that's already faltering.The biggest worry expressed by equity analysts is that the unexpectedly tough prison terms for bribery meted out to Kim Woo-choong, founder and chairman of Daewoo, and three other conglomerate chiefs could undermine investor confidence.
"The fear is that the court's decision could presage new clashes between the government and conglomerates when they need to cooperate instead to boost economic growth," said Andrew Holland, head of research at BZW Securities in Seoul.
The Federation of Korean Industries, which represents South Korea's biggest "chaebol" (industrial groups), said the sentences would hurt business confidence and harm Korea's corporate image abroad.
Poor economic news has already depressed the Seoul bourse, with the government recently estimating the trade deficit could reach a record $20 billion this year. The general share index closed down almost 2 percent shortly after the court announced its verdicts. Further falls are expected.
"The consequences of imprisoning the business leaders are so awful for the economy that the market is hoping that they will receive suspended jail terms on appeal," said Holland.
The courts usually have been lenient toward business leaders tried for corruption by citing their contribution to the nation's economic development.
But even if this happens on appeal, concerns remain about the fate of Daewoo and the other debt-laden industrial groups involved in the bribery case with Chun and Roh.
Some analysts believe the government may force the convicted Daewoo chairman to resign from his position. This happened to Chung Ju-yung, the founder of Hyundai, after he was convicted of illegal spending for his unsuccessful presidential campaign in 1992.
There's already talk that the Daewoo founder will go into exile in Eastern Europe to oversee the group's car production expansion in the region.
However, the removal of Kim from the helm could hurt the group's ambitious $10 billion overseas expansion program since Daewoo is widely considered to be one-man operation centered on Kim.
Kim has personally negotiated most of the group's overseas projects. His conviction and loss of status could make it harder for Daewoo to attract the foreign funds needed to finance global expansion.
Institutional investors overseas have already expressed concerns, with some suggesting that a capital shortage affecting Korea's fourth largest group could result in a financial crisis for the country. Worries have also focused on the financial soundness of the Hanbo steel and construction group, whose chairman also received a jail sentence Monday.
The Seoul court explained it imposed prison terms on the four business leaders because all had been prosecuted on previous bribery charges.
(Distributed by Scripps Howard News Service.)