4 Corruption in the Korean public
and private sectors
Kyongsoo Lho and Joseph Cabuay
Introduction
On 24 May 2003, the International Anti-Corruption Conference (IACC)
held in Seoul, concluded with a reaffirmation by its participants of their
determination to fight corruption and safeguard integrity through efficient
law enforcement and preventive measures, packaged under a new ‘plan of
action’. In a speech at the closing of the IACC session, President Roh
Moo-Hyun described corruption as the biggest challenge to democracy
and pledged that he would always stand ready to challenge corruption by
all means. On the same day, Lee Ki-Ho, former senior presidential secretary
for economic affairs, was arrested for abusing his power by pressuring
a state-run bank to extend loans to Hyundai subsidiaries in June 2000.
During the anti-corruption forum in Seoul, the Korea Independent
Commission against Corruption (KICAC) announced that it was developing
a plan to fight against corruption in both the public and private sectors.
The plan is designed to break the ‘chain of corruption’ in Korea. However,
with other Korean public officials recently being charged with bribery
even after a new code of conduct was publicly declared, the effectiveness
of the KICAC’s plan has yet to be proved.
As the fight against corruption continues after ten years of active anticorruption
efforts, South Korea is still suffering its effects today. Decades
of authoritarian rule have left a legacy of closely bound relationships
between the government and Korea’s conglomerates, better known as the
chaebol. The ties between the public and private sector were often Janusfaced
in character. On the one hand, the highly centralized administration
of Park Chung Hee, President of the Third Republic, used government
intervention and assistance to stimulate and develop the growth of the
Korean private and financial sectors. In doing so, selected industries such
as Heavy and Chemical Industries (HCI) were given preferential loans
and subsidies, which stimulated trade and investment in South Korea.
Through a series of economic plans initiated by the Park Chung Hee
administration, the relationship between the government and the private
sector provided the momentum for Korea’s rapid development.