SCANDAL, INC.

Illegal corporate cash and Korea’s political life have become so enmeshed that the public is now hard-pressed to know who among the country’s leaders, if anyone, can be trusted.
Over the last five years, the list of major political funding scandals has become lengthy, and, when looked at as a whole, is as dismaying as it is astonishing. Billions of won have flowed to leading politicians and their allies from the coffers of some of Korea’s largest companies in a search for access and influence. And the flow apparently continues, leading recently to an investigation of a top figure in the administration of President Roh Moo-hyun and members of the leading opposition party.
While it is impossible to present a full rundown of the cases, arrests, prosecutions and results of each scandal, the following compilation is an effort to demonstrate the breadth and depth of corruption in the nation. The damage this causes to Korean democracy shows up not only in tarnished politics, but also in harmful economic effects and in a growing cynicism now afflicting society.

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2003 SK CORRUPTION CASE

SK Group, Korea’s third-largest conglomerate, is accused of spreading its money throughout the political establishment, entangling Mr. Roh’s closest aide, Choi Do-sul. The allegations have so sullied the Roh administration that the president has called for a national referendum on his leadership and openly questioned his own ability to run the country. SK, which was attempting to expand its business influence, started stumbling economically early this year. The group has engaged in large-scale accounting manipulations and illegal share trading between its affiliates, resulting in financial losses for SK shareholders. A new allegation has emerged that the group had set aside more than 200 billion won ($172 million) in slush funds to be given out to politicians and government officials.

The major figures in the scandal are:
Chey Tae-won, 43, chairman of SK Corp., the flagship company of SK Group. Arrested and detained on Feb. 22. Tried on June 13. Found guilty of masterminding a 1.5 trillion won accounting fraud and insider trading at SK. Sentenced to a three-year prison term. Released on bail on Sept. 22 pending an appeals court decision.
Son Kil-seung, 62, chairman of SK Group. Tried on June 13. Found guilty for his involvement with the accounting fraud. Sentenced to a three-year suspended prison term. Last month, a separate investigation began into allegations that he let SK Shipping, the group’s transportation arm, set aside funds to be used as bribes for politicians.
Choi Do-sul, 56, a longtime aide to Mr. Roh. He has become the focus of the investigation amid accusations that he illegally accepted 1.1 billion won from Son Kil-seung and used it for personal purposes. Arrested and detained on Oct. 16.
Representative Choi Don-woong of the Grand National Party. He is suspected of receiving 10 billion won from the SK Group before last year’s presidential election. The prosecutors are now questioning him.
Representative Lee Sang-soo of the newly launched People’s Participatory and Unity Party. He allegedly received up to 3 billion won before the presidential election and failed to file proper reports on the money’s uses during the election campaign. The prosecution is investigating the case.

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SCANDAL: Government and business in collusion

2003 HYUNDAI BRIBERY
The cash-for-summit scandal produced an offshoot, which itself grew into another major scandal. While investigating the cash-for-summit scandal, the prosecution found out that Hyundai Asan Chairman Chung Mong-hun gave tens of billions of won to politicians as bribes and as illegal political donations.

Park Jie-won, accused of accepting 15 billion won ($12.5 million) in bribes from Hyundai in return for favorable access to projects in North Korea. A court ruling is expected soon in the case against Mr. Park.

Kwon Roh-kap, 73, former Supreme Council member of the Millennium Democratic Party and a top aide to former President Kim Dae-jung. Arrested and detained on Aug. 15. Indicted for receiving 20 billion won ($17 million) from Hyundai to be used in the 2000 legislative election campaign. A new allegation emerged in the last week that he received an additional $30 million from Hyundai. Now on trial.

Kim Yeong-wan, 50, arms dealer. He is said to have laundered Hyundai’s money for Park Jie-won and Kwon Roh-kap. Kim fled to the United States in March and is wanted by prosecutors.

CASH-FOR-SUMMIT
In June 2000, the Hyundai Group and officials in the administration of President Kim Dae-jung sent $500 million to North Korean leaders just before the historic inter-Korean summit. The money would pave the way for what is known as “the Sunshine Policy” of warmer ties between North and South Korea.

An independent counsel was named to probe the use of the money and on June 25 of this year investigators concluded the sum was paid to the North to ensure the staging of the summit. Mr. Kim received a Nobel Peace Prize for the effort to ease tension on the Korean Peninsula. Major figures involved with the transfer of the money were convicted in September for abuse of authority. The sentences were suspended in most cases because the summit was deemed so important to the national interest. At a press conference, Mr. Kim said he viewed the transfer of money as a presidential prerogative.

The major figures in the cash-for-summit scandal were:

Lee Ki-ho, 58, former Blue House senior secretary for economic affairs. Detained on May 31. Tried on Sept. 26. Found guilty of abusing authority and for negligence on charges he pressured the Hyundai Group to wire cash to accounts held by North Korea. Sentenced to a three-year prison term, which was suspended.

Lim Dong-won, 69, former director of the National Intelligence Service. Indicted without detention on June 25. Tried on Sept. 26. Found guilty of ordering money transfers to the North under the Foreign Exchange Transactions Act. Sentenced to an 18-month prison term, which was suspended.

Kim Yoon-kyu, 59, chief executive of Hyundai Asan. Indicted without detention on June 5, tried on Sept. 26. Found guilty of executing cash transfers violating foreign exchange laws. Sentenced to a one-year suspended prison term.

Lee Keun-young, 66, former chairman of the Financial Supervisory Service. Arrested and detained on May 24. Tried on Sept. 26. Found guilty of letting the Korea Development Bank make unwarranted loans to Hyundai. Given a three-year suspended sentence.

Park Sang-bae, 58, former deputy governor of the Korea Development Bank. Indicted without detention on June 10. Tried on Sept. 26. Found guilty of letting the Korea Development Bank make unwarranted loans to Hyundai. Sentenced to 30 months, suspended.

Choi Gyu-baek, 61, former senior National Intelligence Agency official. Indicted without detention on June 5. Tried on Sept. 26. Found guilty of approving agency head Lim Dong-won’s cash transfer request. Fined 10 million won ($8,600).

Park Jie-won, 61, chief of staff for President Kim Dae-jung. Arrested and detained on June 18. Indicted on June 25 for illegal use of his influence to hold the summit. He is believed to be the mastermind behind the cash-for-summit scheme. A court decision for him was postponed on grounds that he is on trial in a separate bribery case.

Chung Mong-hun, the late chairman of Hyundai Asan Corp., was indicted for illegally arranging for the money for the North. Committed suicide on Aug. 4 at the age of 55.

GOODMORNING CITY
The real-estate development company Goodmorning City received more than 340 billion won ($295 million) from investors who backed a shopping mall complex that was to be built in central Seoul. The company president allegedly embezzled part of the sum, resulting in 35 billion won in investor losses. The president is also accused of illegally lobbying politicians to obtain a construction permit for the mall.

Yoon Chang-yeol, 49, president of Goodmorning City. Arrested and detained on July 1. Indicted for embezzlement and illegally lobbying politicians. Now on trial.
Chyung Dai-chul, 59, former chairman of the Millennium Democratic Party. He publicly declared that he received 420 million won ($335,000) from Mr. Yoon, the mall developer, but claimed the sum was a purely political contribution. The prosecution has not arrested Mr. Chyung because he has immunity as a sitting member of the National Assembly. Mr. Chyung returned the funds to the small investors after his role in the affair was revealed.

NARA MERCHANT BANK
Nara Merchant Bank, now defunct, attempted to avoid its collapse by bribing several politicians and officials of the Kim Dae-jung administration, prosecutors said after wrapping up a 76-day investigation in June. Two close aides to President Roh Moo-hyun were also suspected of receiving money from the banking company.

Representative Park Joo-sun of the Millennium Democratic Party, 54. He allegedly received 200 million won ($170,000) from the Nara Merchant Bank in 2000. He currently has legislative immunity as a member of the National Assembly.

Han Kwang-ok, 61, former chief of staff for the Kim Dae-jung Blue House. He was arrested, detained and indicted on charges of receiving 110 million won ($100,000) from Nara Merchant Bank’s parent business, Bosung Group. In September, Seoul District Court handed down a 30-month prison term and 30 million won ($26,000) fine to Mr. Han. He is now in prison.

Ahn Hee-jung, 38, former deputy president of the National Strategy Institute of the Millennium Democratic Party and a close aide of Mr. Roh, was indicted without detention on charges that he accepted 390 million won ($325,000) in illegal donations from Nara Merchant Bank. Trial now under way.

Yeom Dong-yeon, 57, a ruling party official and a close aide to Mr. Roh, is suspected of receiving 280 million won ($250,000) from Nara Merchant Bank as an illegal political donation. Mr. Yeom was indicted with detention on charges of receiving bribes. Trials are still ongoing, and he was released temporarily for a heart condition.

KIM DAE-JUNG’S SONS
The three sons of former President Kim Dae-jung were convicted of accepting bribes and misusing their influence when their father was in office. After Mr. Kim embraced North Korea’s leader, Kim Jong-il, and received the Nobel Peace Prize, his sons were investigated on various corruption charges.

Kim Hong-il, 55, the eldest son and a Millennium Democratic Party lawmaker. Indicted without detention on June 26, 2003 for receiving 150 million won ($130,000) between 1999 and 2001 from the president of Nara Merchant Bank who sought Mr. Kim’s influence to prevent the bank from closing down. Now on trial.

Kim Hong-up, 53, the second son and vice chairman of Kim Dae-jung’s Asia-Pacific Peace Foundation. Indicted with detention in July 2002 on charges of receiving about 4.8 billion won ($4.1 million) between 1998 and 2001 from many businesses and government agencies that sought favors. Tried on May 30. Found guilty and sentenced to a two-year prison term. He was imprisoned but the sentence was suspended on Sept. 10 because of Mr. Kim’s deteriorating health.

Kim Hong-gul, 40, the third son and a researcher at Pomona College in the United States. Detained on May 18, 2002, and indicted with detention on June 5. Tried on Aug. 12, 2003. Found guilty of receiving around 4 billion won ($3.5 million) and equities from a lottery company. The company, Tiger Pools, sought his influence in order to be selected by the government as the sole sports lottery business. Sentenced to 18-month suspended prison term and 160 million won ($145,000) in fines.

MISUSE OF NATIONAL INTELLIGENCE SERVICE FUNDS
Suspicions rose around 1997 that the Agency for National Security Planning, the predecessor of the National Intelligence Service, used its funds from 1995-1996 to help the election campaigns of the then ruling New Korea Party, the predecessor of the Grand National Party. Figures involved in the case dodged investigators but were eventually indicted in 2001. The suspects also resisted trial saying that court procedures were inappropriate and prejudiced. Guilty verdicts were handed down in recent weeks.

Kang Sam-jae, 51, incumbent lawmaker of the Grand National Party and former secretary general of the New Korea Party. Indicted without detention on Jan. 22, 2001 for using 85.6 billion won ($74 million) from National Intelligence Agency’s budget for his party’s election efforts. Tried on Sept. 23 this year and found guilty. Sentenced to a four-year prison term and 73.1 billion won ($66 million) in fines. Sentenced not yet carried out.

Kim Gi-seop, former senior official at the Agency for National Security Planning. Indicted on Jan. 22, 2001. Tried on Sept. 23 this year. Found guilty of collaborating with Mr. Kang to use the agency’s fund for the New Korea Party. Sentenced to a five-year prison term with 12.5 billion won ($11 million) in fines. Now in prison.

The information in this article was gathered by Min Seong-jae and Ser Myo-ja.

by Min Seong-jae and Ser Myo-ja