South Korea’s renewed focus on anti-corruption

Photo Credit: Creative Commons

Seoul has been a site of massive protests following the revelations of President Park Geun-hye’s controversial ties to her friend, Choi Soon-sil, accused of trying to extort Korean companies and using undue influence to solicit business donations for a non-profit fund she controlled. This rather bizarre corruption scandal has brought renewed attention to Korea’s cozy relationships between politicians and business. The headlines may obscure, however, the progress that South Korea is making toward limiting corruption in business. In particular, the new laws.

The South Korean government first enacted anti-corruption laws in the late 1990s. In 1998, South Korea enacted the Preventing Bribery of Foreign Public Officials in International Business Transactions Act (FBPA), the South Korean version of the U.S. Foreign Corrupt Practices Act (FCPA). It was implemented as part of South Korea’s commitment to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. However, this pioneering anti-corruption law was largely not enforced. In 2013, Transparency International reported that South Korea was one of the 20 OECD Convention signatories in the category of “little to no enforcement.” According to the Seoul Central District Prosecutors Office, the authorities enforced only 13 cases in total since the FBPA had been in effect. Most of these cases were related to the bribery of foreign military officials stationed in Korea rather than business-related bribery.

Punishments (both financial and criminal) of the convicted cases were relatively mild compared to other advanced countries that have strict rules against corruption. Furthermore, the FBPA law itself is full of loopholes. First, there is no provision criminalizing the act of bribery through third-party intermediaries. Additionally, the definition of foreign public official, the main target of the FBPA, remained vague. Even though it was possible to punish people who commit bribery under the South Korean criminal code, high-ranking officials used legal loopholes to escape punishment. Most importantly, South Korean people showed a low level of awareness about not only the existence of the FBPA but also the concept of anti-corruption. People expressed their grievances against corruption only when the media covered big corruption cases.

Corruption came to the forefront of the South Korean political landscape in 2011, when a prosecutor was indicted for receiving a luxury car as a bribe for influencing a criminal case. She was acquitted because the court regarded the car as a ‘token of love,’ not as a bribe, which caused public anger. After this case, the Kim Young-ran Act, named after the head of South Korea’s Anti-Corruption and Civil Rights Commission, was first proposed in 2011. This law planned to strengthen existing anti-corruption laws. The Act was submitted to the Korean National Assembly in August 2013. However, lawmakers initially postponed enacting the Kim Young-ran Act out of fear of the impact on their political and business relationships and the possibility of being tried in court under the Act. Lawmakers started to debate the Kim Young-ran Act again in April 2014 after the Sewol ferry disaster in which the ferry capsized and sank with the loss of 304 passengers and crew. Rampant corruption among public officials was raised as one of the reasons behind the accident. Although a great controversy arose over which entities would be covered by this law and monetary limits on gifts, the Korean National Assembly finally passed the Kim Young-ran Act in March 2015. The formal title is the Act on the Prohibition of Improper Solicitations and the Receipt or Offer of Money or Thing of Value, and it took effect on September 28, 2016.

There are four key aspects of the Kim Young-ran Act. First, it is unnecessary to prove quid pro quo for a benefit to be considered a bribe. The Act criminalizes the mere instance of providing gifts or money without the need to prove any connection with the government official’s administrative duties. Second, the Kim Young-ran Act sets the monetary threshold of favors to KRW 30,000 (approximately USD 27) for meals, KRW 50,000 (approximately USD 45) for gifts, and KRW 100,000 (approximately USD 90) for congratulatory or condolence gifts. Third, the new law broadens the definition of “public official” including not only persons in the public sector but also those in the certain private sectors such as teachers both at public and private schools, journalists and so on. Fourth, the law introduces stricter criteria on liability. Public officials will now be punished if they benefit in excess of 1 million won (approximately USD 900) at a time or in excess of 3 million won (approximately USD 2,700) over a year period. The law also introduces the concept of corporate liability, i.e. corporations are responsible if their employees engage in corruption. Overall, the Kim Young-ran Act is stricter than both the previous Korean criminal code regarding corruption and the FBPA.

In many ways, the enactment of the Kim Young-ran Act is a milestone in efforts to eliminate corruption and is likely to drive changes in South Korea. Though some interest groups assert the Act is a threat to the domestic economy and is ambiguous in its coverage, the introduction of the new anti-corruption law is still meaningful as a first step toward a more transparent Korean society. While the level of enforcement remains to be seen, the change towards greater transparency and avoiding appearances of impropriety is already under way. For instance, “going Dutch” is becoming more common among lawmakers and businesspeople. The number of appointments in entertainment venues is declining. That is a significant development given a deep-rooted tradition of lavish business entertainment. Since Korean society is based close personal relationships, businesses are commonly expected to entertain government officials to achieve their goals. In fact, the Korean National Tax Service claims that Korean companies spent about $10 billion on entertainment last year.

Changing such long-standing norms will be a challenge but not an unsurmountable one. Encouragingly, citizens at every level of society are making an effort not to violate the Kim Young-ran Act. This gives hope that, despite the current turbulent political landscape, South Korea will continue to make strides toward joining the influential group of countries that make fighting corruption a global priority.

Suyoung Kim is an ASAN Academy fellow at CIPE