Old habits die hard

PUBLISHED : Thursday, 16 October, 2003, 12:00am
UPDATED : Thursday, 16 October, 2003, 12:00am

The word 'transparency' has become fashionable in Seoul since the 1997-1998 economic crisis. Then, South Korean government officials and bureaucrats at major corporations were accused of covering up the realities, including massive payoffs, that precipitated the near-collapse of the economy. Old habits persist, however, and it is tempting to say that the more things change, the more they stay the same.


We constantly learn of new scandals, payoffs, conflicts-of-interest and the like in relations between government and business, and between companies - particularly those under the umbrella of the same chaebol. The scandal surrounding the SK Group, South Korea's third-largest chaebol is a case in point. Suddenly, the troubles of one conglomerate have exploded into a national crisis in which President Roh Moo-hyun is now putting his future on the line. Mr Roh is requesting a national referendum - a vote of confidence in his leadership - as a result of an investigation in which one of his top aides is accused of accepting nearly US$1 million in bribes. That sum is a small portion of a much larger amount SK funnelled into the coffers of politicians before and after the presidential election last December, in which Mr Roh defeated the conservative candidate. SK, according to prosecutors, was far more generous to the conservatives, giving approximately US$8.7 million to the leaders of the opposition Grand National Party. Members of the Millennium Democratic Party received only US$1.7 million, according to prosecutors.


The sums mentioned in the latest scandal are small change compared to the hundreds of millions, possibly billions, of dollars that two previous presidents, Chun Doo-hwan and Roh Tae-woo were convicted of having received during the 1980s and early 1990s. Aides and sons of Roh Moo-hyun's predecessors, Kim Dae-jung and Kim Young-sam, were also implicated in scandals.


The latest revelations, though, provide a startling glimpse into a much denser, multi-layered system of influence-peddling and payoffs that pervades the relationship between government and business in South Korea. The scandal began last February with the discovery that Chey Tae-won, heir to power in the SK Group, had manipulated share prices in an effort to consolidate his grip. Meanwhile, SK Global, the group's trading arm, was buried in debts exceeding anything that anyone had imagined.


Now the question is whether the government will bring charges against Son Kil-seung, the chairman of the SK Group, widely viewed as a front man for Mr Chey, the chairman of SK Corporation, South Korea's largest oil refiner. It owns 38 per cent of SK Global, the group's trading arm. Mr Chey, as nephew of the founder and son of the long-time chairman of the group, was largely responsible for manipulating the SK Global books to cover up a portion of its liabilities, estimated at US$10 billion. Jailed at the height of the scandal, he is free while awaiting charges - and the ultimate outcome of an investigation that threatens to reach Mr Roh himself, if it turns out that he knew about the alleged payoffs.


Issues of transparency arise at all levels, but in particular in relations between North and South Korea. We have learned that several hundred million dollars were passed to North Korea through Hyundai Asan, responsible for Hyundai's dealings with the North, before the June 2000 summit between Kim Dae-jung and the North Korean leader, Kim Jong-il.


However, we still do not know the full story of what really happened to persuade Kim Jong-il to receive Kim Dae-jung in Pyongyang. It is noteworthy, considering Mr Roh's call for a vote of confidence, that he, as Kim Dae-jung's successor committed to perpetuating his policy of reconciliation, vetoed a bill to authorise a special prosecutor to continue the investigation.


As we have seen in societies from Africa to Asia, secrecy breeds corruption, a cancer that ultimately tears apart a society and leads to civil strife and destruction of people and institutions that government is sworn to protect. Only by revealing the full story of payoffs to North Korea, like that of payoffs by the chaebol to their friends in high places, will South Korea be able to act effectively, in the interests of North as well as South Koreans, in pursuit of reconciliation and Korean unity.


Donald Kirk is the author of two books and numerous articles on Korea for newspapers, magazines and journals