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(News Focus) Corporate transparency key to severing illicit demands from politics

All Headlines 15:08 November 03, 2016

By Byun Duk-kun

SEOUL, Nov. 3 (Yonhap) -- South Korea's political circles are currently under wide public criticism with none but the presidential office at the very center of a corruption scandal over soliciting illegal donations from local firms.

The scandal evolved around the foundation of two nonprofit sports-related organizations -- Mir and K-Sports -- for which 53 companies belonging to the country's top 19 business groups contributed 77.4 billion won (US$67.7 million).

What had initially passed as voluntary social responsibility programs by the companies to support various sports communities and their athletes quickly turned into a corruption scandal after a report suggested the presidential office or some officials there may have twisted the arms of local firms to make such donations, with the Federation of Korean Industries (FKI) that represents the local businesses willingly spearheading the move.

The scandal has since spread to what many view as an unprecedented and the worst political scandal in the country's history, in which Choi Soon-sil, a longtime friend of President Park Geun-hye, is said to have acted as an eminence grise ever since the inauguration of the incumbent administration. She reportedly worked as a de facto ruler behind the scenes based on shamanistic views created by her late father and also longtime acquaintance of the president, Choi Tae-min.

(News Focus) Corporate transparency key to severing illicit demands from politics - 1

With nearly all public attention directed to the rather fiction-like political scandal, the local companies that donated tens of millions of dollars to the two sport support groups were nearly given clemency, partly because they too were viewed as victims of power.

Such a mercy by the public was also afforded because those with power have often coerced illegal gains from local companies.

For instance, the former Chun Doo-hwan administration solicited nearly 60 billion won from local firms for a nonprofit organization set up to support bereaved families of government officials and other South Koreans killed in the 1983 terrorist bombing by North Korea in Yangon, Myanmar.

But soon as the former president stepped down in 1988, the donating firms insisted their donations had been made by coercion, also accusing the former president of establishing the support group as his own retirement plan.

Also, more than four out of every 10 large conglomerates here said coercive fundraisers were the No. 1 reason for reducing their own corporate social responsibility programs in a recent survey by the FKI.

Those indicated in the latest scandal involving the Park Geun-hye administration had at first dismissed the possibility of coercion, apparently to avoid ruining their hard-earned relationship with the incumbent power. However, as the power grew weaker by numerous other scandals, possibly facing a special probe, they began assuming the role of a weak victim, saying they simply had no other choice.

In this file photo, taken on Oct. 26, 2016, prosecution investors are seen carrying boxes of seized evidence after raiding the headquarters of K-Sports Foundation in Seoul in a probe over allegations that the presidential office and FKI raised some US$67 million from 57 local companies by coercion for the establishment of K-Sports and one other sport organization. (Yonhap)

Prosecution of those companies may be nearly impossible, a local counselor noted, because they must be found to have made an illegitimate request in return.

Others, however, say the firms should be treated as collaborators of bribery as they must have at least sought to establish a cozy relationship with those in power.

"Had the companies made their donations in exchange for certain favors or any type of gain rather than pure goodwill, they should be viewed as bribe donors," a prosecutor-turned-lawyer said, while speaking on condition of anonymity.

Those who say the companies are as much at fault as the government also blame the way the firms are run and their lack of transparency for their vulnerability to extortion by those with power.

"Improving corporate management systems to increase their transparency is the best and most practical way to stamp out the possibility of cozy relations between the government and companies," said Kim Sang-jo, a professor at Seoul's Hansung University.

Kim noted only four out of the 57 firms that offered donations to the two sport-related organizations had their spending approved by their board of directors, suggesting should more companies had their donations known at least internally, less would have made such donations.

Lee Nae-young, a political science professor from Korea University, insisted that removing the possibility of any illegitimate relationship between the two was more important.

"Businesses often have no choice but to give money when asked by the government or those in power because the government controls regulations that govern companies, forcing the companies to believe that they will gain nothing from soured relations with the government," he said.

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