EDITORIAL NOTES

Choi scandal exposes govt's business bullying: The Korea Herald

Choi Soon-sil arrives for questioning at a prosecutor's office in Seoul, South Korea on Nov 1, 2016.
Choi Soon-sil arrives for questioning at a prosecutor's office in Seoul, South Korea on Nov 1, 2016. PHOTO: REUTERS

In its editorial on Nov 9, the paper says the strong-arm tactic against conglomerates needs to be addressed.

The Choi Soon Sil scandal is exposing many political and social ills in the country. 

One that stands out among them is the long tradition of the government extorting money from big businesses for public projects. 

The Choi scandal first came to the fore through media reports that two non-profit foundations -- Mir and K-Sports -- were established by funds donated by the nation’s biggest conglomerates and that Choi and presidential aides had been behind the fundraising work. 

As it turned out, 53 firms donated nearly 80 billion won (S$98 million) to the two foundations. Now there is enough evidence that Choi and her associates conspired with presidential aides – like former Cheong Wa Dae chief economic aide An Chong Bum – to press conglomerates to contribute. 

They kept twisting the arms of conglomerates even after they met their financing targets. For instance, the secretary-general of the K-Sports Foundation asked the Lotte Group – which had already donated 1.7 billion won – to provide another 7 billion won. 

It is not hard to guess why they chose Lotte for possible extra donations: The group was facing public and government scrutiny over the leadership feud between the two sons of its founder. Many thought it was only a matter of time before state prosecutors launched investigation into the group. 

Lotte officials were quoted as saying that there was a tug-of-war over the amount of additional money, but they eventually paid the full 7 billion won. But K-Sports returned the money days before the prosecution launched a massive investigation into the members of Lotte’s founding family. 

In other words, K-Sports pinpointed Lotte because it had a weakness, and the conglomerate – in turn – saw the possibility that complying with the request for additional donation could help it cope with its impending crisis. In the end, Choi realized that an investigation by state prosecutors was inevitable and gave the money back. 

Some of the money Choi wrung from conglomerates went to her own private firms— like the 3.5 billion won Samsung provided to a sports marketing company set up by Choi in Germany. 

Both Samsung, whose executive heads the Korean Equestrian Federation, and Choi, whose daughter Chung Yoo Ra is a dressage competitor, took care to disguise the fund as one that was designed to support Korean equestrian hopefuls’ training. 

Now we know the fact and truth: the money was intended to benefit only Chung, as seen by the fact that 1 billion won of the Samsung money having been used to buy a horse for her exclusive use. 

Had these firms offered such money out of “good will,” as Park said when she apologised for letting Choi to meddle in state affairs and peddled influence? 

The Choi scandal is more reminiscent of the long practice of government officials and politicians extorting money from conglomerates, which started with the president’s father – the late strongman Park Chung Hee. 

One major reason the high-handedness and strong-arm tactics of the president in power has survived democratisation and other changes with the times is that the chief executive holds a firm control of powerful agencies, including the state prosecution, tax office, antitrust and financial watchdogs. 

The president uses these agencies as a tool to tame businesses. 

Besides the Choi scandal, there have been more cases in which Park’s aides exerted undue pressure on business executives. 

Hanjin Group Chairman Cho Yang Ho had to resign as chief organiser of the Pyeong Chang Olympics after the culture minister told him that it was the president’s wish. 

CJ Group Vice Chairman Lee Mie Kyung had to give up her post under the same duress from Park’s chief economic aide. 

Not surprisingly, those who spoke with Cho or CJ Group Chairman Sohn Kyung-shik on behalf of Park gave veiled threats such as investigation by state prosecutors or the tax office. 

All these strengthen our conviction that we cannot put an end to the government bullying of businesses without curbing the president’s control of powerful agencies. 

Discussions should start on how to make them more independent of political power. 

The Korea Herald is a member of The Straits Times media partner Asia News Network, an alliance of 21 newspapers.