[OUTLOOK]Reforms need dose of reality

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[OUTLOOK]Reforms need dose of reality

The government has adopted a series of systems to improve transparency after the financial crisis and scandals over presidential campaign financing.
The justification for reform is noble, and silence can be considered tacit approval. Most of the new systems are adopted without much opposition aside from a few reform bills.
It would be perfect if the newly adopted systems could correct the reality, and people could abide by the new rules. However, the problem is that the reality and the systems often move separately. The overly strict regulations often ignore the reality, and some of the new systems do not match the Korean legal system. As even those that were discarded by other countries were introduced, we felt the entire society had contracted “transparency syndrome.”
In the industrial sectors, companies are already making desperate efforts to be transparent for their survival. However, the government, regrettably, is creating new rules to strangle them even tighter instead of appreciating and encouraging their efforts.
Many countries have already abolished the cumulative voting system, which gives more power to small shareholders, but we adopted it in 1998. As companies are not eager to implement cumulative voting systems, the government is forcing the system in conjunction with the system imposing a ceiling on cross-affiliate shareholdings.
In fact, a cumulative voting system has been adopted only by a handful of nations, such as Chile, Mexico, Russia and the United States. In the United States, only a few states, such as North Dakota, where corporate activities are very limited, have implemented the system.
Critics say that the new class action lawsuit system, modeled after the United States and Great Britain, has been adopted without considering realistic difficulties. The existing shareholders’ right to file suit against executives who failed to protect interests of shareholders can meet the expected results of the class action lawsuit. The law would go into effect next year, and the accounting misconduct that happened years ago can become obstacles. The government is reviewing how the past misconduct should be pardoned. Moreover, the law might result in giving lawyers, who specialize in class action lawsuits, more jobs instead of protecting shareholders’ interests.
The revision of the political fund law is another case that does not reflect reality. Early this year, the National Assembly revised the law banning corporate donations to politicians. As the politicians are only allowed to send out mailed requests for donations, I heard a lawmaker sent out 1,500 requests but ended up raising a mere 400,000 won ($384).
Since the elections are not publicly financed and the companies’ donations are essential in reality, companies claimed that the donation limits should be reduced and the punishments should be strengthened. However, their suggestions were not adopted. Less than a year after the revision, there are calls for another revision. It might be a price to pay after stressing only the justifications.
The new anti-prostitution law is not an exception. When the sex trade involves minors and forced prostitution, those involved must be punished severely. Experts say that the existing laws are enough to control the illegitimate sex trade. However, some lawmakers insisted on making stricter laws, and the National Assembly passed the legislation without much opposition.
Until the law was put into effect in September, no one had paid attention to the details. Only when the police began the crackdown, most parts of the society, except for the women’s organizations and the Ministry of Gender Equality, admitted that the law is too strict. Supposedly larger than the agricultural, forestry and fishery industries combined, the collapse of the sex trade industry has negatively affected local markets and the domestic economy.
The anti-prostitution measure is more about the justification than the economic reality and circumstances. If illegal prostitution permeates into the residential areas or is continued in a mutated form, who would take responsibility and what kind of special law should be created?
Even the laws with good intentions will create side effects if they don’t reflect the reality. If the quasi- failure looms larger than the quasi- success, it cannot be called a successful policy.
If the National Assembly continues to enact unrealistic laws for the sake of transparency, the authority of the government and the National Assembly might be undermined.

* The writer is the president of the Korea Chamber of Commerce and Industry. Translation by the JoongAng Daily staff.

by Park Yong-sung
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