“Society must recognize that corrupt companies are not sustainable and seriously threaten democracy in Korea”
Corruption can damage reputation, lead to the loss of contracts and result in lawsuits. It is detrimental to innovation, entrepreneurship and economic stability. Corporate transparency, on the other hand, can improve productivity, employee morale and company culture. But why does corruption prevail in Korean society? And what are the most effective methods in order to make business more transparent?
An Interview with Jung-Soo Kwak, Business Correspondent, “The Hankyoreh”
TI-Korea: The South Korean government has ambitious plans: They want to increase TI’s Corruption Perceptions Index (CPI) ranking for South Korea from its present 51st position to – at least – the 20th place. In your opinion, what must change in order to lift South Korea’s standings?
Jung-Soo Kwak: Corruption on a minor scale has decreased in Korean society. The main problem is however power related corruption; so-called “grand corruption”. Grand corruption is the abuse of high-level power that benefits the few at the top at the expense of the masses, and causes serious harm to individuals and the society. In Korea, power related corruption is closely connected with so-called “Chaebol-corruption” – these chaebols being large business conglomerates owned by a few Korean families. The trial and investigation of two former presidents, Park Geun-Hye and Lee Myun-Bak, and their relationship to chaebol families like Samsung revealed the ugly face of power abuse and the cozy relationship between politicians and businessmen in Korea.
TI-Korea: Since the CPI only covers the public sector, what do you think about the situation of South Korea’s private sector?
Jung-Soo Kwak: Corruption in the public and private sectors in Korea are both sides of the same coin – you cannot examine them separately. The two former Korean presidents’ bribery cases are good examples of this occurrence. In Korean society, there exists the term ‘Samsung Republic’ meaning that Samsung has abused its wealth, networks, and intelligence to gain strong influence in Korea. Recently, the cell phone messages that were exchanged among the senior executives of Samsung, the government, the prosecution teams, and the press have been exposed. Many citizens are shocked as these conversations depict the cozy relations among the parties.
TI-Korea: What and why do companies have to change?
Jung-Soo Kwak: South Korea ranks top ten in the world economy, but the CPI has ranked Korea between the 40th and the 50th place for a long time. South Korea’s corruption perception has improved but there is still a long way to go in order to improve the CPI ranking. Above all, there should be stiff regulation towards companies accused of corrupt practices. These entrepreneurs must be judiciously punished, regardless of their contribution to Korea’s economic development. They should also be banned from business participation, and the society must recognize that corrupt companies are not sustainable and seriously threaten democracy in Korea.
TI-Korea: What are the most effective methods in order to make business clean and more transparent?
Jung-Soo Kwak: The Korean companies must change their corporate governance culture. In Korea, the CEO of a chaebol is like the emperor, an aspect that many citizens want changed. One example is Hanjin Group, a holding company that includes Korean Air. Hanjin Group has become well-known for their “anger management issues”, involving the two daughters of the airline’s Chairman and CEO, Cho Yang-ho. Actually, it is not easy to show an example of “good” company behaviour in the upper echelon of Korean society.
TI-Korea: Mr. Kwak, you have been covering stories about chaebols for more than 30 years. Have you ever been intimidated by any of the companies you have been writing about, or has anyone ever tried to bribe or to silence you?
Jung-Soo Kwak: “The Hankeyoreh” newspaper has claimed to be the independent media from political and business power. Korean society knows this very well. So far, I’ve not experienced any threats nor received bribes from companies because of my reports. The chaebols have exercised leverage over the media companies by advertisement expenditure. Many Korean media outlets insist on mild punishment for corrupt and illegal companies because of their contribution to economic development. It’s the result of secret deals between the chaebols and the media, something which “The Hankeoreh” is not free from totally.
TI-Korea: What was the most exciting or the most shocking story you have ever investigated or covered?
Jung-Soo Kwak: In 2008, Samsung’s CEOs were judicially punished because of some illegal acts including breach of duty, borrowed-name accounts, tax evasion, etc. This case started with whistleblowing by a courageous senior executive of the company. I’ve been in contact with him for a long time, and have written some stories which I’ve received from him before this whistleblowing case.
Interview by Karoline Richter, Communications Director, TI-Korea
Jung-Soo Kwak, Business
Correspondent, The Hankyoreh
The daily newspaper “The Hankyoreh” was established in 1988 after widespread purges forced out dissident journalists. When the newspaper opened, it claimed to be “the first newspaper in the world truly independent of political power and large capital”.
As of 2016, “The Hankyoreh” has been voted as the most trusted news organization by Korean journalists for nine consecutive years. Jung-Soo Kwak has been a business correspondent for “The Hankyoreh” since it started in the 80s. In his articles, he investigates and covers Korea’s Chaebol and corruption-related topics.