Anti-graft law changes society - positively or negatively?

Rows still ongoing over whether to raise price ceilings for meal, gift

By Kim Rahn

Almost a year has passed since the nation introduced an anti-graft law, Sept. 28, last year.

The law, which affects some 4 million public servants, journalists, private school teachers and their spouses, has changed many practices in dining and gift exchanges ― either positively or negatively, depending on the person.

It has influenced consumer spending, and some industries, such as agriculture and restaurants, claim they have suffered damage from the law that bans those subject to it from being given meals and gifts exceeding designated prices.

So nearly one year after implementation, controversy is still ongoing over whether to revise the law, especially to raise the cap of the prices of meals and gifts.

Changes since the enforcement

The law, dubbed the Kim Young-ran Act named after former Anti-Corruption and Civil Rights Commission (ACRC) chief Kim Young-ran who initiated it, bans certain people from being treated to a meal valued at over 30,000 won ($26.5), accepting gifts priced over 50,000 won and receiving congratulatory or condolence money exceeding 100,000 won.

But it also states meals or gifts under the designated prices are prohibited if the offerings have an influence on the receiver’s performance of their duty.

So, the law brought enormous confusion at the beginning of its enforcement ― police had a report of a case where a university student gave his professor a canned coffee worth around 1,000 won, while parents wondered whether they could give a bouquet of carnations to their children’s teachers on Teachers’ Day.

Now about a year later, the law seems to be getting more positive responses than negative ones, with supporters saying it is a turning point toward more transparent society.

In a survey by Gallup Korea in June, 68 percent of 1,011 respondents said it was good for the country to adopt the law, with 18 percent viewed it negatively.

When asked why the law was good, 26 percent of the supporters said it prevents corruption and irregularities; 17 percent cited the prevention of influence-peddling; 14 percent talked about the prevention of bribery and pricey gifts; and 7 percent said the law made society fairer and more transparent.

Another poll conducted by the Korea Institute of Public Administration (KIPA) in November, two months after the enforcement, showed 85.1 percent agreed with the law. About 76 percent said they recognized that favors and gifts, which they used to give or receive customarily in the past, were improper.

About 68 percent of the people subject to the law said they were receiving fewer requests for favors or influence than before, and 47.8 percent said they go Dutch when having a meal.

Many companies also say they have reduced their expenses for “entertainment” offered to other companies or individuals who have power to influence their businesses. For example, 10 pharmaceutical companies spent 5.2 billion won entertaining doctors or hospital staffers, who have power to decide whether to use their medicines, during the first half of this year. This was down 18.9 percent from 6.4 billion won the year before, according to the Financial Supervisory Service.

For the public sector, reports about public servants’ taking gifts or accepting influence-peddling requests have increased, according to the ACRC. Some 2,300 alleged violations were reported in the first six months since enforcement, which included 412 cases of money or gift receiving. In these cases, 62 percent of public servants voluntarily reported it to the related authorities or returned the items to the providers.

“With the anti-graft law, providing meals, money or gifts to civil servants in exchange for influence-peddling is not regarded as a custom anymore,” an ACRC official said.

Loopholes, side effects

But providing money, gifts or entertainment still takes place secretly: Golf course booking is made under false names, and some people fabricate receipts after having pricey meals over 30,000 won, as there is no way to detect these without a report.

Protests against the price limits of meals and gifts is still ongoing, as many say the caps were set too low without considering reality where the price of a lunch course exceeds 30,000 won and there are few gift sets that cost less than 50,000 won if they include fruits or meat.

Protests are strong especially from the agriculture, flower and foodservice industries, which claim they have seen a large decrease in sales. According to a survey by the Korea Rural Economic Institute, seven major department and discount store operators saw a 14.4 percent drop in their sales of gift sets for Seollal, or the Lunar New Year holiday, earlier this year, compared to the previous year. The sales of gifts sets comprised of agricultural products especially declined by 25.8 percent.

As the law took effect about two months before the dining industry’s peak season for year-end gatherings, the foodservice industry was also hit hard. A survey by the Korea Foodservice Industry Research Institute of 709 restaurant owners earlier this year showed their sales in December decreased 36 percent compared to the previous year.

Due to the sales decline, nearly 40 percent of the respondents had or planned to cut the number of staff. Some 30 percent said they were considering closing down the restaurants or changing food items.

So, related organizations have demanded a revision of the price caps of 30,000 won for meals and 50,000 won for gifts. A nationwide group of people in the agricultural and livestock industries staged a rally near Cheong Wa Dae in August, claiming President Moon Jae-in said during his election campaign that the anti-graft law needed exceptional clauses for domestic agricultural, fisheries and livestock products.

“We’ve seen huge damage from a decrease in the sales of gift sets for the Seollal and Chuseok holidays. We understand the nation has to root out corruption, but what good would it be if corruption is rooted out and our industries collapse?” they said in a statement.

They say the ceiling for the gift price should be up to 100,000 won from the current 50,000 won, and even Agriculture Minister Kim Yung-rok promised he would seek to raise the ceiling to 100,000 won.

But five anti-corruption civic groups issued a joint statement in August to denounce such a move.

“Agricultural groups demand a revision of the law to exclude agricultural products from the gift price limit,” they said in a statement. “To become a transparent society, it is an unacceptable demand to raise the price cap of gifts which public servants can receive from those who would seek their influence.”

Public opinion is also divided. In the Gallup Korea poll, 52 percent wanted to raise the caps for meals and gifts, while 41 percent did not.

Pak Un-jong, chairwoman of the ACRC, expressed her support for the current rule.

“I don’t think the law makes it difficult for people to exchange gifts with relatives and neighbors at holidays,” she told journalists in July. “Raising the caps to help specific industries is against the new government’s anti-corruption stance and will diminish the country’s efforts for transparency.”

Noting policies and laws have to be consistent, she said that the anti-graft law has been in effect for less than a year and that at least a one year business cycle will be needed to analyze the impact of the law.

“If data show the law negatively affects not only specific industries but also the macroeconomy, we’ll prepare complementary measures through a reasonable process,” Pak said.

Following an ACRC request, the KIPA is studying the economic effect of the anti-graft law. The ACRC will discuss whether to revise some clauses or not after the results come out around the end of the year.