Anti-graft act unnerving businesses
An official of the Korea Farming and Stockbreeding Federation holds an almost empty beef gift package worth 50,000 won in front of the Constitutional Court in central Seoul, Thursday. The court upheld the anti-graft law, dubbed the Kim Young-ran act, as constitutional, restricting public officials, private school teachers, journalists from receiving gifts priced over 50,000 won beginning Sept. 28. / Yonhap
By Kim Tae-gyu
The country’s business circles expressed concerns on the adverse impact of the anti-graft act on the overall economy, which passed the final test of the Constitutional Court review Thursday with its implementation two months ago.
In particular, they worried that the law, dubbed the Kim Young-ran Act, would cause people to spend less money and negatively affect the already weak economy whose quarterly growth failed to top 1 percent for three straight quarters.
Beginning on Sept. 28, public officials, private school teachers, journalists and their spouses should not be served a meal that costs more than 30,000 won ($26) or receive gifts priced over 50,000 won. Congratulatory or condolence money should be less than 100,000 won.
Around 4 million, or 8 percent of the total population 50 million, would be subject to the act.
“We respect the verdict of the Constitutional Court,” the Federation of Korean Industries (FKI), the top business lobby group, said in a statement. “To reduce confusion and the negative impact on the economy, specific guidelines should be made.”
The Korea Chamber of Commerce and Industry (KCCI) pointed out that the anti-corruption law fails to make certain whether certain practices are legally accepted or not.
“The act’s lack of clarity may discourage social relationship-building activities and the healthy culture of exchanging gifts. Hence, measures should be taken to minimize economic contraction or damages on small-sized business operators,” it said.
By industry, premium restaurants and golf clubs are expected to be hit hardest because it is almost impossible for the former to prepare a menu cheaper than 30,000 won per person. The latter is strictly prohibited from doings business in gifts.
Local beef farmers are also projected to face a sharp decrease in demand as the value of a Korean beef gift set is typically higher than 100,000 won, double of maximum allowed under the Kim Young-ran Act.
Foreign firms’ concerns
Foreign companies in Korea are also concerned that the bill is not clear. A host of questions were also raised on its equality and fairness (see page 1 of Korea Times July 20 edition).
“Our group has a zero-tolerance policy for failure to abide by any local laws. As its clauses seem to be very vague and confusing, I worry that I may mistakenly violate it. Then, I would run the risk of being dismissed,” said an official in a local subsidiary of a global trading firm.
“Beginning Sept. 28, I will not meet Korean bureaucrats or journalists for the time being. I will resume social relationships with them once all issues are sorted out.”
An executive, who leads the communications office at the Korean unit of an international financial company, concurred.
“We will meet journalists just during lunchtime. We won’t have dinner with them. They will not be happy because many time-pressed journalists prefer dinner. But we have no other choice,” he said.
“Foreigners in our company are in panic, too. How can they deal with the bill when even Koreans struggle to cope?”
A director in the manufacturing segment said that the bill may end up discriminating against foreign firms.
“Korean enterprises will eventually find loopholes to entertain public servants so that they will be able to remain informed on pending regulatory changes or other crucial inside matters,” he said.
“However, I am afraid that foreign firms won’t be able to do so due to ultra-strict internal compliance regulations. The anti-corruption law is likely to penalize foreign players.”
A senior official in the Korean subsidiary of an international automaker said that the bill benefits only law firms.
“We are working together with a law firm to set up internal guidelines. I heard a host of other companies, especially foreign ones, are doing so in order not to breach the bill,” she said.
“The Seoul administration should have come up with a much more clear-cut bill instead of the current one, which causes so much controversy and confusion. Law firms may love such features but obviously we don’t.”