Skewing data enough to delist Korea Inc.

Song Young-hoon
The author is a managing partner of the law firm Siwoo.

The Statistics Act, first enacted in 1962, has been revised 17 times. The most publicized revision was made in January 2016 — a result of several Democratic Party (DP) lawmakers scrambling to propose its amendments in the summer of 2013. In June of that year, Statistics Korea was to announce a new Gini coefficient to precisely reflect the income of high-income households. But the statistics office decided to not announce it with just one month left before the presidential election. The Gini coefficient is a barometer of income disparity.

At the time, DP lawmakers proposed one revision after another to ensure the neutrality of statistics. “As the act of not announcing statistics also can undermine the integrity of statistics, we need to control it properly,” said Rep. Kim Hyun-mee, a DP lawmaker at the time. She added, “We need to punish the action of leaking the data from the statistics office even before its official announcement, because it can affect the statistical outcomes and announcement timings.” She then submitted a revised bill.

DP Rep. An Min-suk also proposed a revision. “We must strengthen the responsibility to keep confidentiality of government data and establish the neutrality of statistics by punishing those who had access to the data before their official release,” he said.

Rep. Jung Chung-rae, another DP lawmaker, underscored the need for stronger punishments for data manipulation as penalties were too light. Another DP legislator joined the chorus by proposing a revision to fix the term of the head of Statistics Korea at four years.

The Park Geun-hye administration was no exception. It submitted a revision to the Statistics Act to bar anyone from wielding influence in the creation and announcement processes of government statistics. Those bills were integrated and passed in June 2016. The stenographic record of the minutes of the lively meetings in the National Assembly shows the DP lawmakers were very serious on the issue.

In a meeting in 2014, Rep. Yun Ho-jung, who later served as the acting chairman of the DP, claimed, “The tenure of the head of the national statistical office is guaranteed far longer than the term of the president in many countries.”

In another meeting in 2015, Rep. Kim Hyun-mee said that the statistical data reportedly had been provided to the Blue House or the Finance Ministry in advance so that the data could be manipulated. She wondered how we could ensure the neutrality of statistics. In other words, she knew precisely how statistics could be “massaged.”

What happened under the Moon Jae-in administration is truly shocking, given its members’ insistence on the independence of statistics and the guaranteed tenure of the head of the statistics office. According to a recent announcement by the Board of Audit and Inspection, President Moon’s Blue House and the Ministry of Land, Infrastructure and Transport ordered the Korea Real Estate Board (REB) to manipulate the rate of change in apartment prices of Seoul. The ministry summoned workers of the REB and threatened to “cut your budget or dismantle your organization unless you cooperate with us.” At that time, Kim Hyun-mee, the former DP lawmaker, was the land minister.

Income distribution rather worsened under Moon’s presidency after his government pushed for a sharp increase in the minimum wage. Upon the release of negative numbers, the senior presidential secretary for economic affairs brought staffers of Statistics Korea to the Blue House and ordered them to create new data. It was not “income-led growth” but “statistics-led growth.” Around that time, the Statistics Korea chief was dismissed from the post for refusing the presidential office’s illegitimate request to access the data.

What should we do about this methodical manipulation of statistics in the Moon administration? If a listed company deceives shareholders and the market through systematic accounting frauds, the company could be delisted. The Moon administration’s data distortion can provide the grounds for delisting Korea, Inc. if it were a company. In fact, Greece received a bailout in 2010 and ended up under a receivership directed by the European Union after lying about the size of its fiscal deficit in 2000. If data manipulation repeats, Korea could end up like Greece.

When the Land Ministry pressured Statistics Korea to fabricate the inflation rate of apartment prices in Seoul in 2019, the total market of apartments in Seoul was worth about 1,234 trillion won ($914 billion). Even if the manipulation was done by just 0.01 percent, it amounts to 123.4 billion won. We live in a world where a bus driver gets fired for embezzling just 800 won of the fare. Everyone responsible for the data distortion must be sternly punished by law so that this kind of absurd incident does not get repeated.

Translation by the Korea JoongAng Daily staff.