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The Political Economy of Corruption in Korea(2)
chungheesoo

 

Corruption kills people; Corruption ruins the economy; Corruption violates human rights.

 

Joseph H. Chung (정희수), Ph.D., Professor of Economics at Quebec University in Montreal (UQAM)

 

 

(지난 호에 이어)

 The police do not arrest people of power despite their obvious crimes and corruption in exchange of bribery. The bureau of prosecutors does not investigate clear cases of corruption, if the accused are leaders of business ready to pay bribes.

 Even if the investigation shows undeniable proof of corruption, the prosecutor does not accuse the person involved.

 Heads of the largest Chaebol were suspected several times for corruption but they were seldom sent to the court trial.

 Even if they were judged guilty, they were soon liberated. In many cases, even if the prosecutor provides proof of guilt, the court makes ruling of not guilty.

1.6 Transaction of laws

 It is a well known fact that the powerful Chaebols persuade the law makers to pass laws in their favour in exchange of disguised campaign funds.

 Laws adopted by the National Assembly can affect the interests of business and other interest groups. The groups which are the most sensitive to laws are large corporations. Large corporations have, in fact, a specialized group whose job is to prevent laws harmful to them and foster those laws which are favourable to them. The laws that have been the most visible target of lobbying have been labour related laws.

 Chaebols have been spending a lot of bribe money paid to law makers to prevent the adoption of pro-labour laws. This is one of the reasons for low wages and long hour of work in Korea.

1.7 Transaction of jobs

 Another form of corruption is the transaction of jobs. In the case of a Casino in Gangwon Province, 80% of jobs were illegally given, in exchange of bribes, to those who were close to lawmakers or other persons close to the government of Park Geun-hye.

 It is suspected that Mrs Choi Soon-sil (now in prison for 20 years for corruption and illegally interfering in government policies) would have intervened, for large sum of bribe, in the nomination of cabinet ministers, judges and other high ranking officials.

 

2. Evolution Stages of Corruption

 The corruption in Korea has evolved by the following stages

(1) Economic development and collusion of government-business.

(2) Formation of oligarchy of corruption

(3) Creation of corruption community

 

Stage 1. Economic Development and the emergence of bilateral collusion: government-business

 One of the key factors of the economic miracle in Japan and Korea was the concept of Japan Incorporated (Japan Inc.) and that of Korea Incorporated (Korea Inc) by which I mean the situation in which the government and the business act as one single company. The government and the business become almost equal partners for economic policies and development.

 The close cooperation government-business led inevitably to collusion in planning and executing the project of industrialization and economic development.

 The story of collusion between President Park Chung-hee and Chung Joo-young, founder of the Hyundai Group and Lee Byung-chul, founder of the Samsung groups is almost a legend.

 The stage of government-business collusion was almost identical to the period of take-off of the Korean economy (1960-1970), In fact, owing to the Korea Inc. and the bilateral collusion, Korea could free itself from absolute poverty in less than thirty years.

Stage 2. Formation of Oligarchy

 As the economy developed further and the process of planning of economic development was executed, the role of bureaucracy became essential for the success of planning. In particular, the Bureau of Economic Planning (EPB) became the key factor of success of economic planning. As a result, the daily participation of EPB bureaucrats and high ranking officials of the Ministry of Finance and other civil servants joined the collusion. This led to the trilateral collusion: politics-bureaucracy-business.

 No doubt, the trilateral collusion made significant contribution to the Han-River economic miracle. But in the absence of close supervision of the collusion, the members of the collusion became attempted to appropriate some of the fruits of economic development.

 To do so, the collusion members formed a close circle to hide their illegal or immoral activities. In fact, this close circle became an exclusive oligarchy. One of the functions of the oligarchy consisted in allocating privileges to big businesses in exchange of bribe money.

 There were several ways of giving public resources to big businesses. The policy loans were the most lucrative gift to the businesses. The government made loans of huge amount of money at an interest rate of less than 5%, while the market rate was above 20%.

 This money was designed to foster industrialization and exports. True, a part of these loans were used for the construction of factories and exports. But, in many cases, the businesses made a fortune by making loans of the money borrowed at an interest rate much higher than 5 %.

 The big businesses were given tax incentives; they were allowed free entry to industrial complexes; they were given lands which were supposed to be used for industrial use but a part of these lands were used for land speculation. The Chaebols were given all sorts of permit and privileges; they were given huge amount of grants and subsidies for reasons which were not clear.

 This stage of the formation of the oligarchy took place in 1980s and 1990s. We may remember that theses two decades were active in reordering the global economy into neo-liberalism, which gave more power to big business and considerably weakened the power of the government. Under this circumstance, it could have become easier for business to dictate policies in their favour by giving bribes.

 It was also the period of the transformation of Korean industry into heavy and chemical industries allowing big businesses to have almost unlimited sources of funds.

 

Stage 3. Establishment of Corruption Community

 The oligarchy might have felt the need for strengthening itself by sharing the illicit income with media, the academics and conservative civic groups. In this way, the network of corruption was expanded to form a community of corruption.

 The community of corruption is designed to widen the network of corruption so that it can better defend themselves against the anti-corruption forces. Thus, the Korean society became doubly divided between conservatism and progressivism on the one hand and, on the other, between pro-corruption force and anti-corruption force. (다음 호에 계속)

 

 

 

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