International Business: SOUTH KOREA
THE QUESTIONS IN SEOUL ARE ONLY GETTING TOUGHER
The moment of truth is approaching in the biggest bribery scandal to hit South Korea since its founding. Scrappy public prosecutor Ahn Kang-Min has jailed former President Roh Tae Woo for amassing a $650 million slush fund and has questioned 36 corporate chieftains about their "contributions" to him. By Dec. 5, Ahn must decide whether to bring Roh to public trial, a move that could force the arrest of business leaders and bring new pressures on Korea's ruling party. If Ahn backs down, an outraged public will conclude that he is merely a puppet of President Kim Young Sam.
The betting is that the shrewd Ahn will try to demonstrate that his office is in fact independent--without letting the scandal spiral out of control and bring down the entire Korean Establishment. He is in a bind, though, because the Supreme Public Prosecutor's Office up to now has earned a reputation as a pawn of Korean presidents.
BAGS UNDER THE EYES. By grilling the heads of the giant chaebol, or conglomerates, and throwing Roh in jail, he has already given the office new stature, one in keeping with Korea's pell-mell push toward fuller democracy. "It's a top priority for him to restore and improve the status and honor of the office," said Kang Man-Soo, one of Ahn's aides.
Ahn, who studied law at the prestigious Seoul National University, led the 1993 investigation of Hyundai Chairman Chung Ju-Yung, who was charged with campaign-finance violations when he was a presidential candidate. Chung received a suspended sentence. In recent weeks, the hard-drinking, slightly pudgy, 54-year-old Ahn has grown big bags under his eyes, partly the result of working nonstop from 8 a.m. to 3 a.m.
Few Koreans are under any illusion that Ahn, who is the third-ranking prosecutor, is acting purely on his own. "Ahn has been acting with the tacit support of the President," says Lee Han-Koo, president of the Daewoo Research Institute.
The test of his integrity will be whether to arrest, and how severely to punish, the chaebol chairmen who gave money to Roh. The five-page warrant issued on Nov. 16 for the arrest of Roh accused Kim Woo-Choong, chairman of the Daewoo group, of giving the former President a total of $31 million on seven occasions from 1988 to 1991--some of it in return for a contract to build a submarine base. Choi Won-Suk, chairman of Dong-Ah Construction Industrial Co., also was named. Neither of the executives has commented on the allegations.
The public will cry foul if only one or two chaebol heads are arrested or let off with suspended sentences. And since most business leaders have admitted to giving funds, punishing only a few would be unfair. The chaebol claim they uere coerced. They argue that an indictment and jail sentence for any of the first-rank tycoons would hurt Korea by damaging the chaebol's international credibility. And throwing all of them in the slammer, they warn, would likely cripple the economy. "It would be a shock to the business community to see Chairman Kim, an architect of modern Korea, imprisoned," observes Stephen E. Marvin, director of international research at Ssangyong Investment & Securities Co.
The even tougher question facing Ahn is whether to trace the money trail into the political sphere. He has already arrested and detained Roh's security aide, Lee Hyun-Woo, on bribery charges. Kim Chong-In, Roh's chief secretary for economic affairs, was questioned on Nov. 21.
EMBARRASSING. The public now wants Ahn to question Lee Won-Jo, former head of the Office of Bank Examination, a regulatory body. He is suspected of managing the slush funds of both Roh and his predecessor, Chun Doo-Hwan. Lee could be the key witness if Ahn decides to extend his investigation to include other politicians such as opposition leader Kim Dae-Jung, who admitted receiving $2.5 million from Roh.
Some insiders believe President Kim has so far cleverly manipulated the scandal to destroy his foes. But if Ahn goes too far, he might turn up embarrassing evidence. Kim, after all, was the candidate of the ruling party during his 1992 campaign, and his enemies charge that he must have received some funding from his predecessor.
That's why the balancing act Ahn is performing is so delicate. "Please evaluate the rights and wrongs of this investigation when the results are out," he says. What's at stake, ultimately, is Korea's ability to clean house without destroying its economic and political stability.By Laxmi Nakarmi in Seoul and Steven Brull in Tokyo