Graft-Busters Hit the Streets

Fighting corruption in government and business in South Korea isn't new, but President Kim Dae Jung's campaign may prove to have a lasting impact

By John Larkin/SEOUL

Issue cover-dated October 4, 2001

ON A STEAMY Hong Kong summer's day last year three South Korean bureaucrats closed in on their quarry: a man in a vest carrying a suitcase so stuffed with documents that some poked out. Spotting his pursuers, the man sprinted through a maze of narrow alleyways. It was a 20-minute chase before he was caught and taken to a hotel for questioning. "It was like a Hollywood action movie," said one of the civil servants.

It wasn't exactly the type of work that the investigators with the Korea Deposit Insurance Corporation, or KDIC, had expected when they signed on to play a part in their country's latest and most dramatic attempt to stamp out corruption. But it does show the lengths to which authorities are willing to go.

The man nabbed in Hong Kong had fled South Korea with $1.1 million that investigators say he purloined from the bank he worked at. They allege he tried to launder the money through a personal offshore account. But he didn't escape the KDIC. The money was recovered and the culprit was forced back to South Korea where he received a stiff fine.

The KDIC is only one front in the battle to stamp out a social evil that has bedevilled South Korea's democracy since Syngman Rhee was elected its first president in 1948.

President Kim Dae Jung has made fighting corruption one of his top priorities, recognizing that foreign investors would shun his economic-rejuvenation programme unless a high-profile battle is waged against sleaze. Soon after winning office in late 1997, he outlawed the funnelling of corporate dollars to political slush funds, cutting off the source of South Korea's notorious money politics.

Spurred by polls showing that Koreans viewed eliminating corruption as a priority second only to economic growth, the government forced conglomerates to adopt more transparent accounting practices. More recently, anti-corruption laws passed in June provide stiff penalties for wrongdoers and protection for whistle-blowers.

Though Kim's administration has been plagued by corruption scandals, some of which have ended ministerial careers, this may be at least partly because they are no longer swept under the carpet. "It may look like the problem is worsening, but it's actually getting better," says Park Won Soon, a political-reform activist otherwise critical of Kim's government. Even now however the government finds itself engulfed in a scandal over allegations that top public officials were bribed by a businessman.

Activists like Park worry that political exigencies will compromise parts of the anti-corruption effort. An anti-money-laundering bill passed by the national assembly on September 3 scrapped a draft plan for a new watchdog to make snap investigations into political funds.

The government blames the opposition, which opposed the draft bill fearing "Big Brother" snooping into its fund-raising. "The bill did not meet our expectations," says Park. "We wanted it to ban [political] money-laundering and establish an independent prosecutor, but these important things were excluded."

A crackdown on senior bureaucrats suggests further politicization that could erode public support for the campaign's more laudable aspects. The government insists the crackdown, which includes investigations into whether top officials have extramarital affairs, will boost moral standards. But others see a tired political tactic of using veiled threats to dissuade key personnel from cultivating ties with the opposition--favoured to win next year's presidential election.

Ridding Korea of corruption won't be easy. Cronyism and graft have traditionally been rampant in politics and business, sometimes at the highest levels. Former Presidents Chun Doo Hwan and Roh Tae Woo were jailed in 1996 for bribery. The following year the son of former President Kim Young Sam--who brought Chun and Roh before the court after labelling corruption "the Korean disease"--was convicted of bribery and tax evasion.

Anti-corruption crackdowns, therefore, are nothing new. The systematic nature of President Kim's approach, however, suggests it will have some lasting impact. "South Korea is on the right track for tackling corruption," Peter Eigen, chairman of the anti-corruption group Transparency International, told a conference in Seoul in September, while noting there was still a long way to go.

The KDIC's aggressive mandate can take some credit for the optimism. It was set up six years ago to pay out depositors if banks went bust. Now it has the tasks of recovering public money it has pumped into debt-ridden banks and tracking down greedy executives who saw the 1997 economic crisis as an opportunity to skip town with ill-gotten loot.

The KDIC's broad powers assisted in the conviction for fraud this year of seven former executives with the defunct Daewoo Group. Since 1977, the KDIC has initiated court proceedings against nearly 1,300 people and recovered 503 billion won ($390 million). "The KDIC is the most promising thing about Korea's anti-corruption efforts," says Kim Joon Gi, a law professor at Seoul's Yonsei University. "It actively chases people down. You never saw that kind of thing before."

Another hopeful sign is the anti-corruption bill enacted in June. It set stiff penalties for corrupt officials including jail terms of up to 10 years, fines up to 50 million won and prohibition from employment by public or private companies for five years. A presidential commission will formulate anti-corruption policies from next year and protect whistle-blowers.

"If there is any corruption by top officials, the commission can directly accuse them to the prosecution," says Kim Ho Shik, who as minister of the Office of Government Policy and Coordination is overseeing the clean-up. "If [the prosecution] does not indict, the commission can go to a higher court."

But Kim admits the hardest battles lie ahead. Enforcement of regulations has been lax. And the state prosecutor's office is perceived as tainted by government influence.

Black marks like that put Korea 42nd of 91 countries in Transparency International's Corruption Perception Index this year. Making sure pre-election partisanship doesn't intrude on curing Korea of its "disease" might ensure better marks next year.