South Korean Politics: The Scandals within the Scandal (Part 1)



The scandals rocking South Korean politics are hard to sort through, and as is often the case, what appears scandalous on the surface hides even deeper malfeasance. The deeper causes include restraints on political campaigns that are among the most restrictive in the OECD, almost guaranteeing an active gray market for political funds, and government policies under Lee Myung Bak that shoveled money at firms with proven track records of weak corporate governance, if not outright corruption. We outline the broad contours of the scandal today and some of campaign finance issues and take up the political economy in a subsequent post.

The coverage has been deep in the Korean press, but The Wall Street Journal blog provides among the best big-picture overviews. A business tycoon from a troubled firm (Sung Wan-jong, Keangnam Enterprises) gives an interview suggesting his involvement in bribery of officials close to the president. He then commits suicide, leaving as a parting shot a list of politicians with donations penned next to them. The list is a virtual roster of high-ranking officials not only close to the president, but close to the financial levers of the ruling Saenuri party as well: two former presidential chiefs of staff as well as the current one (Huh Tae-yeol, Kim Ki-choon, Lee Byung-kee) and Gyeongsang governor Hong Joon-pyo. In addition, the note pointed to Saenuri National Assemblyman Hong Moon-jong, Busan Mayor Suh Byung-soo and Incheon Mayor Yoo, who were in charge of organization and finance during Park’s presidential campaign. That campaign was already severely tarnished by revelations of illicit campaign activity on the part of the National Intelligence Service.

Particularly embarrassing was the fall of Prime Minister Lee Wan-koo, not only because of the corruption charges but because of the difficulty the president has had in keeping the position filled. Kim Yong-joon, her first nominee, pulled out of consideration due to his sons’ alleged draft-dodging and the family’s real estate speculation. Chung Hong-won survived National Assembly confirmation hearings, but was forced to offer his resignation over the Sewol ferry disaster. Two other names put into contention at that time (Ahn Dai-hee and Moon Chang-keuk) immediately faced opposition from various quarters, and Chung held on until replaced by Lee Wan-koo. No sooner did Lee take office than he both issued a grand statement against corruption and was caught on tape claiming he could force the media to drop embarrassing stories and find academic sinecures for his cronies (Korea Herald coverage here). Now that’s chutzbah.

From further information gathered after Sung’s suicide, it appears that his bribery may have been distributed across the aisle, allowing Park to put the opposition on the defensive and deter a more far-reaching probe—and purge. Despite rapidly falling poll numbers, recent bi-elections suggest that the opposition is even less popular than the ruling party, no mean feat. Given the lack of independence of the prosecutors and the influence they yield—not to mention their own recent corruption problems—serious doubts are being raised about the integrity of the investigation. If there was ever a case for a new procedure for a special prosecutor, this is it; the issue is under consideration.

But oddly South Korea’s political problems may have to do with too many controls on campaigns rather than too few. In earlier posts on freedom of expression based on joint work with Jong-sung You, I argued that Korea maintains an array of restrictions on political speech including criminal defamation laws that muzzle the opposition. But the country also maintains an array of restrictions on the ability of candidates at different levels to raise financing for their campaigns; indeed, according to my colleague Jong-sung You, Korea’s campaign laws may be the most restrictive of any in the advanced industrial states. Among the restrictions:

  • For National Assembly elections, candidates are allowed to legally raise campaign funds but their campaign fund-raising can start only about 120 days ahead of the election day. Incumbent National Assembly members have an advantage of being able to raise funds outside of these time constraints, giving them advantages.
  • Prohibition of campaign fund-raising for elections for party offices other than the party chair or president, and even these positions cannot legally raise money prior to registering as candidates for office (see Bush and O’Malley campaigns);
  • Prohibition of campaign fund-raising prior to formal registration of candidacy for mayoral and gubernatorial elections, with a very short period of legal campaign fund-raising;
  • Prohibition of campaign fund-raising for local and provincial council elections altogether.
  • Moreover, political parties are not allowed to receive political contributions other than membership dues.

For those of us who feel that the Citizens United decision was a disaster for American democracy, these limits should seem reasonable. Things have gone so far in the United States that the head of the FEC herself has admitted that the agency will be unable to control the coming abuse in the 2016 election. But even critics of the status quo must admit that restrictions can have all kinds of perverse consequences that are difficult to foresee. In Korea, it appears that, as with restraints on free speech, laws are designed to favor incumbents with favors to distribute. With very short campaign times—and in a rich and media-saturated society—even National Assembly candidates are forced to raise money on very short notice. Severe limits on the ability to raise campaign funds provide strong incentives for illicit fund-raising regardless of party. Any serious effort to get to the bottom of this scandal will require a close look at the yawning gap between political expenditures and the capacity to raise funds legally and focus on increasing the transparency of campaign financing.

Next time: the political economy of the scandal. Who is Keangnam Enterprises anyway?

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