CLIENTELISTIC PRACTICES have been a major part of South Korean politics since the founding administration of Rhee Syng-man. In 1988, the National Assembly held a hearing of the Fifth Republic, summoning several leaders from major *chaebol** groups, including those from Samsung, Sun Kyung (SK), Lotte, Hyundai, Lucky Venus Group (LG), and Han Jin, to investigate their illegal involvement in politics. In 2016, similar *chaebol* group leaders were once again present at the National Assembly for a hearing regarding their involvement in the Choi Soon-sil gate** scandal. Korean politics and business have frequently been interconnected through a chain of corruption.
Clientelism deeply rooted in history
Political clientelism is a political system in which a client gives political or financial support to a patron in exchange for a specific benefit. Since the period of ancient Rome, the relationship between the client and patron has been crucial to understanding the political system. In South Korea, clientelism is usually associated with corruption between big companies (the clients) and political leaders (the patrons). Political corruption usually happens as corporations and the political leaders seek more their own private benefits than the common good.
In June 1952, the first major political clientelism scandal broke out in South Korea under Rhee Syng-man's administration. The "tungsten dollar incident" involved illegal exports of goods using tungsten dollars. “Tungsten dollars” refers to the total amount of dollars that was earned by exporting tungsten, a chemical element that is usually used in making lightbulbs and steel. Imports of grain and fertilizer by using the tungsten dollars were banned at that time, but the government secretly allowed several trading companies, such as the Korea Tungsten, Goryeo Industrial Enterprise, and Namsun Trade to import those resources by using tungsten dollars. These companies used the money to import a total of 9,940 tons of flour and 11,368 tons of fertilizer and then sold them to poor farmers, making unreasonable profits. They earned ₩500 billion of profit in total, and part of the money was used in the re-election campaign for President Rhee Syng-man. Later, the investigation was not carried out fully since it was the misdeed of the Liberal Party, which was the ruling party at that time. The case came to an end in April 1957, with Rhee sentenced to only one year in prison.
Major political clientelism incidents also happened in the 1960s during the administration of President Park Chung-hee. At that time, Park was pursuing pro-business policies, and corporations grew in size at a tremendous pace. In 1961, Park established the Federation of Korean Industries (FKI), which is a non-profit independent organization consisting of South Korea's major conglomerates and associated members. The FKI was originally formed to inform the government on major economic issues and policies of the country and to assist corporations in forming a business community. However, in reality, the FKI was intimately tied to the central government, and was later revealed to be full of bribery cases.
One of the most controversial cases under Park Chung-hee happened in 1978, when Hyundai Construction distributed apartment houses to high ranking officials rather than to their homeless employees. Hyundai Construction received permission from Park‘s administration to construct 1,512 Hyundai apartment houses in Apgujeong on condition that 952 houses would be sold to homeless employees working in the company. However, 661 out of these 952 houses were instead given to members of the National Assembly, high ranking officials, and journalists.
President Roh Moo-hyun was also criticized for implementing policies that gave advantage to specially favored corporations during his administration. According to a report shown on the Seoul Broadcasting System (SBS), a popular South Korean television network, Roh's brother-in-law, Roh Geon-pyeong, who was a tax official, interceded in the sale process of Sejong Securities, a financial holding company engaged principally in the on-line retail brokerage business and bond trading activities, and was charged with receiving illegal profits. Roh Geon-pyeong was criticized as a "shadowy ruler"***. Prosecutors later found out that President Roh Moo-hyun and his wife Kwon Yang-suk were also involved in the case and had received illegal money from the sale.
Political clientelism today
Under Park Geun-hye’s administration, the intimate relationship between the government and major firms has become even more controversial. In 2016, a major clientelism controversy broke out, in which the *Cheongwadae*, or the Blue House, and the former Health and Welfare minister was alleged to have pressured the National Pension Service (NPS)**** to support the merger of Samsung C&T and Cheil Industries. According to *Hankyoreh*, a Korean newspaper, a member of the NPS's voting committee said that he was pressured by the Chairman of NPS, Moon Hyung-pyo, then minister of Health and Welfare, as well as *Cheongwadae*, to support the merger between the two companies. The NPS, which at that time held an 11% stake in Samsung C&T, thus voted for its merger with Cheil Industries even though the terms of the merger were unfavorable to Samsung C&T shareholders. This was regarded as a deal favorable to the owner of Samsung Group, who held a 42% stake in Cheil Industries. The owner was in need of the merger for his own benefit, as he wanted a smooth transfer of managerial control within the family. Consequently, the NPS was criticized for its ₩600 billion of losses after having supported the merger.
In addition, the Chairman of SK, Chey Tae-won, was released from prison for contributing a lot of money to the Mir and K-Sports Foundations, which were foundations that Choi-Soon-sil had allegedly established in order to collect money from major firms through embezzlement. On January 5, 2012, Chey Tae-won was sentenced to four years in prison for embezzling ₩63.6 billion and investing ₩49.7 billion in a subsidiary fund. However, Chey Tae-won was granted a special pardon on the National Liberation Day of Korea and was released on August 14, 2015, after only spending two years in prison. It was later revealed that the special pardon was planned. The prosecutors investigated a taped conversation between Chey and the conglomerate's vice CEO Kim Young-tae in a prison in the city of Uijeongbu on Aug. 10, 2015. "‘Supreme chairman' has decided to ‘come home,'" Kim said to Chey in the recording, using phrases the prosecutors suspect were code words. He continued, "Our burden has also increased. The chairman has given us a ‘certain task.'” The prosecutors suspect that "supreme chairman" is a reference to President Park, while "come home" means the pardoning of Chey, and "certain task" indicates a form of payment. It has been confirmed that the Chairman of SK Supex, the group's decision-making body, asked President Park for Chey's pardon just 17 days before the recording. The prosecutors speculated that Chey donated a total of \11.1 billion ($9.38 million) to the Mir and K-Sports foundations from October 2015 to January in return for Chey’s special pardon.
How to end the vicious cycle
With increasing number of corruption reports in the government, the public has been raising its voice to protest against political clientelism. There have been strong efforts to reform political clientelism in South Korea, but not much progress has been achieved. According to Professor Han Sun-gu (Prof., Department of Econ.), “Rather than creating new anti-corruption policies, officials should try to point out problems from existing policies and fix and develop them. Enforcing the existing policies is more important than creating new and inefficient ones.”
In South Korea, existing anti-corruption laws and systems are still weak. For example, there is no effective special inspection system that specifically deals with political corruption by high public officials. Currently, the national prosecutors and the Board of Audit and Inspection of Korea are in charge of dealing with a wide range of political corruption cases in the country. However, as shown through Choi Soon-sil gate and past political clientelism cases, a great deal of corruption happens amongst high officials. Therefore, a special inspection system that only handles corruption involving high officials is needed in South Korea.
Furthermore, there should be a better protection system for whistleblowers who wish to spread information for the sake of the public good. Many officials in South Korea are restricted from exercising their rights to refuse to perform unfair activities. This is one of the reasons why many people carry out illegal activities under the order of high officials. Therefore, officials who voluntarily wish to prevent corruption must be granted stronger protection when refusing illegal orders. In the United States, the False Claims Act of 1986 imposes penalties on those who defraud governmental programs. Under this law, people who are not affiliated with the government may file actions on behalf of the government. South Korea needs also stronger acts that protect whistleblowers.
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In South Korea, it has been common for politicians to receive enormous political funding from major firms and businessmen who receive financial/business benefits and privileges in return. The problem is that the President holds too much power, whilst big companies violate business ethics and responsibilities in order to gain special benefits that have led to market dominance and distortions that harm the public/consumer interest. The two powers have long been conspiring to gain private benefits, which is why the country is far from achieving its full potential in political and economic development.
**chaebol*: a family-controlled industrial conglomerate in South Korea
**Choi Soon-sil gate: The suffix “gate” refers to South Korea’s president Park Geun-hye’s close confidant Choi Soon-sil’s involvement in the political scene. Choi was alleged to have established the Mir and K-Sport foundations using illegal money accumulated through the help of President Park. Since 2016, many accusations were made against Choi, including her daughter’s unfair entrance to Ehwa Womans University.
***Shadowy ruler: An unelected party or person who has the actual power behind the political scene.
****The National Pension Service: a Social Security System implemented by the Korean government wherein the government collects monthly contributions from insured residents and citizens legally working. Under this system, the government pays pension benefits for those insured or their dependents.