Big Graft Taints an Asian Success Model

SOUTH KOREA is a nation scorned.

Until late last month former President Roh Tae Woo was a hero of sorts, a dictator who had relinquished power, cleared the way to a more democratic government, and retired to a life of modest means.

But on Oct. 27 he admitted to operating a secret political fund that may have reached $1 billion and hoarding almost a quarter of that amount for himself. He shed a tear of remorse in his televised confession, but many Koreans doubt his contrition and his tears.

Prosecutors hinted Friday that he would be arrested this week. These actions are unprecedented here but it is difficult to say whether they will placate a betrayed public.

In demonstrations and in polls, many people now say that if Roh is truly sorry, he should kill himself. "The guy is a cheap, cowardly liar - that's the image he's managed to produce," says a former senior government official.

President Kim Young Sam is handling the matter with a combination of delicacy and adroitness, but he faces perhaps insurmountable dilemmas in the weeks ahead. The country's mighty conglomerates, the source of the illegal funds, have again been tainted by accusations of corruption and kickbacks. The scandal has forced widespread introspection about the age-old practice of superiors passing money to subordinates.

Roh's revelation has also discredited one of the great national success stories of the late 20th century - South Korea's lightning rise from postwar ruin to the ranks of the world's leading industrial states.

Some Asian leaders cite South Korea in arguing that a certain amount of authoritarianism is necessary for rapid economic development and can lead to a transition to democracy. Proponents of this view have characterized the downside of the South Korean evolution - incidents of repression and corruption - as relatively mild and worth the end result of a world-class economy.

But the case of South Korea now must be amended to show that this country's version of state-guided capitalism has bred a massive system of institutionalized corruption. Roh "is the manifestation of the legacy of bad politics in Korea since 1945," says Lhee Ho-Jeh, a political scientist at Korea University in Seoul.

In the hot seat

Last week the grim-faced chairmen of the country's biggest corporations - Samsung, Hyundai, LG, and others - trooped into prosecutors' offices. "After questioning the businessmen," chief investigator Ahn Kang Min told reporters Saturday, "we have confirmed that some of the money given Roh was bribes."

The business leaders have asserted that their huge contributions were general-purpose, involuntary political donations, and the Korean Federation of Industries has promised to end the practice. But it may not be so easy to halt the cash flowing under the table.

It is commonplace here for money to be passed around to gain favor and show gratitude.

Parents make gifts of money to their children's teachers, bosses augment their subordinates' salaries, and politicians visit their supporters with envelopes in hand.

"In this part of the world," notes Kim Kihwan, an economist who is a government adviser, "it's traditional for elders to give money to younger [people] and for superiors to give money to subordinates. In a society where equality has not been a strong theme in human relations, this practice has become part of the culture."

The military men who ruled South Korea for most of its postwar years needed money to cement their underlings' loyalty and build up political support. Many observers claim Roh's slush fund was probably created by former President Chun Doo Hwan or his predecessor, Gen. Park Chung Hee.

Park, who was assassinated in 1979 after 19 years in power, was the mastermind of Korea's state-led capitalism, allocating resources and funds to certain corporations in order to make them competitive in important industries. This economic structure typically encourages illicit donations - known here and in Japan as "money politics" - because companies constantly need to win official favor.

The state-guided economy "was bound to be dirty," says the former government official, who asked not to be named, "and now we are bringing our dirty linen out into the open. The challenge is where do we go from here."

Looking for direction

That is certainly the question for President Kim, who spent decades opposing this country's military regimes but won the presidency in December 1992 largely because he and Roh had joined political forces in 1990. Roh resigned from their Democratic Liberal Party (DLP) in advance of the election, but many Koreans now find it hard to believe that Roh did not transfer a portion of the fund to Kim.

Kim Dae Jung, the leader of the main opposition party and long-time rival of the current president, has admitted receiving some $2.5 million from Roh during the 1992 campaign, and asserts that President Kim Young Sam received much more.

The president says he did not take any money from Roh, but as one Western diplomat in Seoul says, "it remains to be seen how he can demonstrate his own distance from this and make it convincing."

Kim has urged prosecutors to pursue the investigation as far as it goes and promised no political interference. Indeed, one of Kim's own reforms - outlawing the practice of keeping bank accounts under false names - is what forced one of Roh's erstwhile supporters to reveal the existence of the fund last month.

The problem is that a full investigation may irreparably discredit many politicians, particularly those in Kim's ailing DLP.

As it is, South Korea's political scene is fragmented into four groups. "The structure of the political establishment is crumbling," says Cho Se-Hyung, a leader of the largest opposition party. "This is a very dangerous period. There is no leadership, and people are very uneasy." Elections for the National Assembly are set for April 1996.

The country's business chiefs also face disgrace, a worrisome prospect to those who want to see the economy stay on course. If corporate leaders are imprisoned, warns an economist with links to a major conglomerate, the government will be "destroying the key element, which provides stability and creates jobs."

And if Roh is punished heavily, many people assert that he will incriminate President Kim. Says one business executive who is a Roh supporter, "That's the final card."

The other horn of the dilemma is equally perilous. If President Kim does anything to curtail the prosecutors' reach or protect Roh, the public outcry would likely jeopardize his presidency.

The Roh backer, speaking on condition of anonymity, asserts that Kim has orchestrated the scandal in order to revive his credentials as a reformer and reverse a decline in his popularity.

"Kim Young Sam is not interested in changing the root causes of this kind of incident," this man says of the secret fund. "All he cares about is what people think about him."

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