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In Korea, lobbying takes different forms

[NEWS IN FOCUS] Special interest groups find ways around the law to wield influence

Jan 02,2015
When authorities raided the office of a government relations manager at a Hanwha subsidiary on Dec. 9, it raised eyebrows, but not necessarily because it involved a company in one of the country’s biggest conglomerates.

The incident was part of an investigation into how an internal Blue House report had been leaked to the public and who was responsible.

The confidential document, which was quoted in a Nov. 28 report by a local daily newspaper, alleged that Chung Yoon-hoi, President Park Geun-hye’s former aide during her days as a lawmaker, has served as a power broker at the presidential office, conducting behind-the-scenes operations to wield his influence.

Yet, perhaps just as important, it also cast a light over the role of government relations workers - which before then had been a relatively obscure position - and raised questions about their true function.

The mid-level Hanwha manager, it later turned out, had received a copy of the report from one of two police officers who illegally leaked the internal paper from Park Gwan-cheon, a senior police officer who admitted to drafting the document while he was seconded to the Office of the Presidential Secretary for Civil Service Discipline.

The primary task of government relations workers, otherwise called intelligence officers, is to reflect and work toward their companies’ interests in the face of legislative, judicial and administrative institutions.

They should be able to prevent their top executives from being indicted or convicted, help scrap regulations that hurt their interests, induce the passage of bills and influence policies that would work in their favor.

They are the ones who regularly frequent the National Assembly and maintain nonstop contact with the police, the National Intelligence Service and the National Tax Service to collect information and pay the bills when any relevant figures, including reporters, get together.

A whirlwind of confidential intelligence naturally converges on these intelligence officers, so it’s not too far-fetched to say that the information those workers acquire is powerful enough to determine the fate of their companies.

Yet, even though these officials are essentially performing the duties of a modern-day lobbyist, Korea bans any and all paid lobbying activities.

Criminal law stipulates that any donation to a lawmaker should be done “unconditionally,” which can be interpreted broadly, and even more loosely enforced. That means corporate government relations employees in Korea have traditionally had to walk a fine line between legality and illegality.

“Covert lobbying has the potential to easily stir corruption,” said an aide to a lawmaker who asked not to be named. “Various secret expedients, including bribery, are mobilized as government relations workers do their jobs.”



Kim Young-ran bill and lobbyist bill

A new bill intended to ban illegal solicitation and prevent conflicts of interest among public officials is expected to enable authorities to punish government officials and lawmakers for accepting any form of illegal funding, even without conditions attached.

The legislation that became known as the Kim Young-ran bill, named after the former leader of the Anti-Corruption and Civil Rights Commission who proposed it, is set to ultimately become the most reliable apparatus for blocking any form of lobbying or favor in the political arena. The National Assembly is poised to pass the bill, though did not meet the year-end deadline.

Lawmakers still need to work on coming up with clear-cut definitions for articles involving “illegal solicitation” and “conflicts of interest,” which some argue can be vague.

Critics have also expressed concerns that the bill would blur the boundary between the fair handling of civil petitions and requests that entail various rewards. In Korea, the idea of political donations has yet to catch on, which indicates that the Kim Young-ran bill would make it more difficult for lawmakers to raise political funds, many predict.

But the introduction of yet another bill to officially allow lobbying could actually alleviate that side effect, according to some experts. At the very least, it could guarantee the collection of healthy political funds and that lawmakers accept civil petitions without strings attached.

“The Kim Young-ran bill could constrict the activities of lawmakers who receive a lot of petitions, in a realistic sense,” said Jo Seung-min, a visiting professor at the Institute of East and West Studies at Yonsei University. “A lobbyist bill, if implemented following a social consensus, could complement the Kim Young-ran bill. Funding professional lobbyists for transparency would reduce covert transactions.”

One lawmaker’s aide, who requested anonymity, added that if professional lobbyists were allowed, the legislative process could become more transparent. “Many government relations people I meet … tend to rely on their personal networks - regional and alumni ties and kinship,” the source added.

Currently, however, a lobbyist bill is not officially on the table, and the Kim Young-ran bill has priority.

“It is realistically impossible to proceed with legislating both the Kim Young-ran bill and a lobbyist bill,” Rep. Kim Yong-tae, the ruling Saenuri Party’s assistant administrator for the policy committee at the National Assembly, said on Dec. 14.

Another Saenuri lawmaker Chung Woo-taik, who heads the policy committee at the National Assembly, said any measure to add the lobbyist bill as part of the Kim Young-ran bill could be discussed as an alternative.

This is not the first time that Korea has deliberated on formalizing lobbying. In 2007, the Ministry of Justice moved to pass a bill that would “disclose lobbying activities and register lobbyists.” But after harsh objection in the legal community, it was killed.

Many government relations workers claim that those opposed to legitimizing lobbying are mostly large-scale law firms. These firms, in large part, fear that such regulations would jeopardize their source of revenue amid increased competition, particularly as more domestic lawyers and foreign law firms enter into the Korean market.

Over the past decade, top law firms have pioneered their own niche market by establishing their own teams, usually known as legislation support teams or legal consulting teams, which are hired by large corporations to help them move bills in their interest.

As of August, 132 former bureaucrats were employed by Korea’s top four law firms to effectively perform duties suspected to be linked to lobbying, although they do not disclose their exact job responsibilities.

When asked to offer his view on officially authorizing lobbyists, a lawyer at one of top 10 law firms in Seoul, who is renowned for his expertise in “supporting legislation,” refused to answer, citing the sensitivity of the matter. Lawyers at other law firms reacted no differently.

“Most lawyers would hate the idea of legitimizing lobbying, in my knowledge, although no one would come forward to make it clear,” said a government relations manager familiar with the situation who works at the Seoul branch of an American company. “It’s a matter of a turf war, given that a sizable portion of profits at major law firms come from unofficially lobbying lawmakers.”

The negative perception of lobbyists, attributed in large part to several scandals involving power or weapons brokers in past government administrations, has also hindered legitimizing the occupation.

Under the Park Chung Hee administration in the 1970s, a Korean-American businessman known as Pak Dong-seon was embroiled in a political scandal in the United States. He was charged in 1976 with bribing members of the U.S. Congress with millions of dollars from the Korean government in an attempt to convince the United States to keep its troops in Korea.

Another figure who contributed to the image of lobbyists in Korea as contemptible was Linda Kim, a Korean-American arms dealer better known as Korea’s “Mata Hari.”

She was investigated in 1996 for her role in securing the multimillion-dollar Baekdu Project to introduce reconnaissance planes capable of electronic eavesdropping for the Texas-based E-Systems Inc., although she denied engaging in any illegal lobbying, including offering money in return for favors.

The scandal first surfaced in 2000, after the JoongAng Ilbo published love letters that a former defense minister had sent her, which stirred allegations that Kim had taken advantage of his affections to peddle influence. She was later sentenced to one year in prison for bribery and leaking military secrets but left for the United States without serving it.



Lobbying at home and abroad

Unlike in Korea, paid lobbying activities are legal in the United States and many other nations. The Lobbying Disclosure Act in the United States requires that all active registrants file quarterly activity reports with the clerk of the U.S. House of Representatives and the secretary of the U.S. Senate.

Some Korean companies in the United States, including Samsung Electronics, already hire lobbyists. The tech bellwether has been embroiled in patent disputes with Apple on four continents, after Apple filed a suit against Samsung in April 2011 for copying its iPhone design as the two giants battled for dominance in the smartphone industry.

In an effort to gain trust from the U.S. Federal government and lawmakers, Samsung Electronics America spent a record $1.43 million on lobbying over 2014 through five lobbyists it hired, according to lobbying disclosures from the Office of the Clerk of the U.S. House of Representatives.

The amount is comparable to the $3.37 million Apple reportedly spent in 2013 on lobbying in Washington, up 71.1 percent from a year earlier.

Samsung’s lobbying expenditure in the United States has been incremental over the past three years - $1.22 million in 2013; $900,000 in 2012; and $150,000 in 2011.

One of the lobbyists, Joel Wiginton, a former external relations veteran at Sony, was tapped to run Samsung’s new government-relations office in Washington in February 2013 as its vice president.

Some of the federal agencies Samsung has lobbied include the U.S. Federal Trade Commission, the Department of Commerce and the Executive Office of the President.

In Seoul, the top 10 conglomerates operate large-scale departments related to government relations. Samsung Electronics and Hyundai Motor have the biggest teams, with 20 to 30 members. And the government relations organization at LG Electronics is led by the director of external cooperation, whereas SK has a corporate relations team that covers responsibilities having to do with government relations.

Those government relations workers have so far been able to keep a low profile largely because most companies don’t place them in an independent department with an explicit government relations title. Most of those employees belong to teams with ambiguous roles like planning, sustainable management, fair trade or policy.

Mid-level government relations managers are usually recruited from among former aides to lawmakers, government officials and reporters who previously covered government institutions.

A number of the country’s corporate leaders have been placed behind bars on embezzlement and misappropriation charges, situations that can be blamed partly on companies’ unusually complicated ownership structures and the ensuing legal challenges.

For most of these relations managers, contacting sources at the prosecution and getting a handle on the situation are their foremost responsibilities when any legal trouble arises.

“The bigger the influence of the corporate family, the more sensitive the company is to government regulations, the bigger the government relations office at the company becomes,” said an executive at a major conglomerate.

This “economy of scale” tends to be why small corporations mostly support the formal authorization of lobbyists and those efforts.

“Only wealthy companies and interest groups are currently able to influence lawmakers and government officials, whereas smaller companies and ordinary citizens who can’t afford [unofficial] lobbying have a weaker edge,” a lawmaker with the main opposition New Politics Alliance for Democracy said on the condition of anonymity. “Lobbyists could open a window of opportunity for the minority.”

BY SEO JI-EUN [spring@joongang.co.kr]









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