[FOUNTAIN]Slush funds pair up with politics

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[FOUNTAIN]Slush funds pair up with politics

“Slush fund” was the buzzword of 1987, along with the phrase, “Live like a human.” On April 19, the former chairman of Pan Ocean Shipping, Park Geon-seok, committed suicide. The company was the subject of a National Tax Service probe after an insider tipped the agency to possible tax evasion, and Mr. Park left a note to the informer, “Live like a human. God will punish you.” The investigation later revealed that Pan Ocean Shipping had created a slush fund of 10 billion won ($8.4 million).
The Standard Korean Dictionary defines “slush fund” as funds that are hidden to evade taxation. However, most slush funds are linked to politicians and government officials in the form of an illegal donation or bribe.
Accumulating and managing a slush fund was once considered a measure of political competency. The term became widely used even among average citizens, who half-jokingly refer to a secret nest egg as a slush fund.
Slush funds are created by accounting trickery. It is believed that companies in construction, shipping and distribution industries can easily create illegal funds, thanks to relatively frequent cash transactions through rebates or commissions. Slush funds can be used to obtain favors to win business rights or to get loans at a lower interest rate. Sometimes bribing the powerful people makes business a lot easier by being able to bypass some tedious technicalities. Money can also buy insurance, a more comprehensive protection from the powerful politicians.
At the transition of each administration, we have witnessed the return of the slush fund scandal. Presidents Chun Doo-hwan’s and Roh Tae-woo’s slush funds were revealed by the Kim Young-sam administration, and after the Kim Young-sam administration, the Hanbo Group’s slush fund scandal was unveiled. Kwon Roh-kap and the SK scandals were uncovered after President Roh Moo-hyun took office. Some times, however, slush fund scandals have been unveiled right before the transition of administrations.
No financial scandal is complete without an allegation of an illegal fund. But the scandals related to slush funds were murky on the details. We have seen so many lists of bribers and bribe-takers and blackmailers. But we have not yet seen a single major case where the purpose of a slush fund was clearly defined.


by Lee Se-jung

The writer is a deputy business news editor of the JoongAng Ilbo.

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