Legacy of corruption still exists in South Korea

SEOUL — Allegations of multibillion-dollar fraud at banks and revelations by South Korea’s top business conglomerate of shady dealings are forcing the country to grapple anew with a legacy of deep-seated corruption.

State prosecutors have been probing a burgeoning scandal at regional savings banks. The Ministry of Land, Transport and Maritime Affairs has come under a cloud amid reports of officials receiving bribes and being lavishly wined and dined.

Lee Kun-hee, the influential chairman of Samsung Electronics Co. who himself has run afoul of the law more than once over the years, has publicly blown the whistle on corruption within the Samsung conglomerate, the nation’s biggest, and called for a clean-up.

Just last year, South Korea was basking in the global spotlight as the proud host of the Group of 20 economic summit, drawing praise for its journey from grinding poverty to affluence in six decades that included the Korean War and a transition from military rule to a boisterous democracy.

The latest slew of alleged malfeasance highlights a darker side of that transformation as South Korea strives to play a greater international role.

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Among the South Korean executives who have be involved in corrupt business ... more >

The problem is embedded in the country’s bureaucracy and its Confucian-based culture that emphasizes family connections, regional ties and friendships forged in school, said Kim Taek, a specialist in public administration ethics at South Korea’s Jungwon University.

“Corruption in Korea is a kind of time-honored tradition without which social success would be almost impossible,” he said.

It also can be traced to decades of close links between past authoritarian governments headed by former army generals and the big business conglomerates such as Samsung, Hyundai and the now-defunct Daewoo that drove the country’s industrialization.

South Korea, one of the world’s poorest countries a half century ago, now has a seat at the top tables of global governance such as the G-20, boasts world-beating corporations and has ambitions to be a leader in many fields, including becoming a regional financial center to rival Tokyo and Hong Kong.

The government acknowledges such aspirations are threatened unless the country cleans up its act.

Corruption in the civil service is a “problem that we must overcome to enter the rank of top-class nations,” Prime Minister Kim Hwang-sik told officials.

Some 86.5 percent of respondents in a Korea Institute of Public Administration survey of small and large companies described corruption among high-ranking public officials as “serious” in 2010, the highest result since the poll began in 2000.

Transparency International, a corruption watchdog, gave South Korea a rating of 5.4 in its 2010 corruption perceptions index — midway between highly corrupt and very clean. That ranks South Korea alongside countries and territories such as Botswana, Puerto Rico and Poland but far below many of the developed nations it has sought to emulate.

“Foreign investors are sensitive to the level of corruption as a source of business risk,” Jean-Marie Hurtiger, president of the European Union Chamber of Commerce in Korea, told reporters. “The government should aim for a zero corruption society.”

Prosecutors have filed charges against executives and large shareholders at Busan Savings Bank, accusing them of illegal loans, accounting fraud and other wrongdoing worth more than $6.5 billion.

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