[FOUNTAIN]Real names, real problemsThe law that requires all financial accounts to be registered in the account holder's real name is a double-edged sword. The system has no effect on the everyday life of ordinary people, but it can be a source of fear for the wealthy, especially politicians and businessmen who exchange dirty money. Violating the law can ruin companies and political careers.
In 1982, President Chun Doo Hwan tried to ram through a similar law in the aftermath of financial scandals in Seoul's financial "curb market," an informal money-lending network. His real purpose, though, was to legitimize his military-backed administration. "I will bet my political future on putting the real-name system into effect," Mr. Chun said. A few days later, however, he withdrew that pledge out of concern that it could harm, not legitimize, his rule. He learned an invaluable lesson on the interaction of politics, the economy and cash.
Eleven years later, in 1993, President Kim Young-sam secretly prepared a similar law and sprung it as a surprise that August. That may have been one of Mr. Kim's biggest accomplishments during his term, but it came around to bite him. Details of illegal funds managed by close aides of Kim Hyun-chul, Mr. Kim's son, came to light when the law went into effect. The younger Kim's aides managed enormous sums in over 100 borrowed-name accounts. If it were not for his father's real-name financial transaction policy, the younger Kim would not have gone to jail.
The law also put funds used by Chun Doo Hwan and his successor, Roh Tae-woo, in the spotlight. Details of slush funds the presidents received from businesses, amounting to hundreds of billions of won, were disclosed.
The transfer of illegal funds through borrowed-name accounts in several scandals came to light during Kim Dae-jung's tenure. Lee Hoi-chang, as the presidential candidate of the opposition Grand National Party, has promised to bring political funds under the real-name system. But it is important also to understand the nature of borrowed-name transactions, or that proposal could be meaningless. The problem with the proposal is in how to regulate politicians who open accounts in borrowed names and transfer money through these accounts. Strengthening financial regulators' power as a way of controlling borrowed-name accounts would be an abuse of power and could undermine the confidentiality of deposit accounts. This might lead to unrest in the financial market. A real-name system must inspire the people's confidence.
The writer is a JoongAng Ilbo editorial writer.
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