Shall We Make That Perfectly Clear?

By Tom Coyner

Writing this column every other week comes out to some 25 essays a year, and there are times I wonder how I may come up with something new and worthwhile. But like most local business writers, I have a special card up my sleeve ― I work in Korea. Just when one may face writer's block, dear old Daehan Minguk comes through with something intriguing if not at least superficially outrageous.

This time around it has been yet another sensational case of corruption ― or, to put it more precisely, non-compliance that ultimately leads to a lack of transparency. Technically, one may point out corruption, non-compliance and lack of transparency are different issues, but at least in this country, they are fundamentally the same. The reader will need to bear with me on this, since this explanation will have to be a minor journey, traveling from point to point.

First, let's look at the latest crisis du jour ― the oil spill off Mallipo Beach. As you may recall, a tugboat lost a barge during rough weather that resulted in a collision with an oil tanker. As the Wall Street Journal reported, oceangoing tugs must have their cabling, couplings and other equipment inspected before making an oceangoing trip to comply with both regulatory and insurance requirements. It has come to light that prior to departure, the tugboat failed to receive the required checks from the Incheon regional marine-affairs and fisheries office. Furthermore, according to a rumor, the boat captain ignored a warning that to depart in such seas was hazardous. In other words, for whatever reason, at this point of time, one gets the impression that the boat captain decided to wave off compliance and prudence ― and this was probably not the first time he had done so.

Indeed, while the boat captain may end up with a prematurely terminated career, he is in many regards not dissimilar to seemingly reckless thousands ― if not millions ― of others in this country. The fundamental problem of this incident may also be found with countless other, daily examples within Korea. That is, is there is a general lack of regulatory compliance. The problem is multifaceted, ranging from a cultural pattern to do as one may when one believes there is little chance of getting caught; to too many laws & regulations being simply impractical; to an amazing discretion on the parts of police and regulators, which can be good given the overall legal environment, but can also encourage noncompliance. All of which leads to a lack of transparency, since so much needs to be hidden from the eyes of regulators, competitors and stakeholders.

The obvious question for many foreign business professionals is why is the problem so pervasive here? Part of the answer is that Koreans have for centuries found it necessary to ignore laws and regulations as a matter of practical survival.

To illustrate the point, a long-term foreign resident once investigated why his vehicle had been issued a parking ticket given that others had been parking along the same curb for years. He soon discovered that most parking along curbs in Seoul is technically illegal. And such is the case for many things in Korea. This foreigner, a well-respected Korean linguist ― and a somewhat notorious wag ― declared, ``The whole country is illegal!'' That was obviously an exaggeration, but I have found the statement works surprisingly well as an on-going model.

The problem can be traced to two major areas. First, the laws are open to interpretation by enforcement professionals ― and the community at large _ given their vagueness and/or sometimes their impracticality. And second, since society is cutting legal corners as a matter of course, most businesses would be at a significant economic disadvantage if their managers adhered to the letter of the law.

To make things interesting, occasionally the authorities decide to crack down on transgressors of a certain regulation or law by suddenly arresting, without warning, an individual as an example for the community. Too often the defense is simply ``but everyone else was doing the same!''

When I was a Peace Corps Volunteer here in the 1970's, it seemed that only lower and, at best, midlevel culprits in business and government were publicly humiliated for one kind of corruption or another. These days we see the Prosecutor's Office more fairly focusing on the top of the organizational pyramids. So, in this regard, the Republic of Korea's legal system has come a long way over the past three decades.

At the same time, top business executives are often given light or suspended sentences for major white collar crimes. The judges' stated reasons are these people are key to running their top-down business conglomerates and as such their absence could create major damage not only to the welfare of their innocent employees but also to their many suppliers. In other words, societal concerns outweigh the narrow focus of punishing an individual's misdoings. And, I must admit, these judgments in this environment are generally fair calls. But in so doing, the legal system, in my mind, is tacitly admitting that many of the laws and regulations are impractical and to a certain degree the actions of the guilty may be considered understandable if not totally pardonable.

Given the above, I cannot help wondering if all of this unintentionally encourages business observers to legally cut corners as they may rationalize they are doing what they ``need to do'' for the overall competitive welfare of their company, its employees and their employees' families. The natural cascade effect is that transparency is not welcomed, since much needs to be hidden as a matter of survival. And for the naive foreign business professional who first walks into this setting, things are not at all clear - and not simply because of the language barrier.

Thanks to this dog-eat-dog marketplace, corruption, non-compliance and lack of transparency foster an environment that makes it possible for journalists to come up with front page copy on a regular basis. Recently there has been a spate of articles in the international press attempting to explain why Korea continues to have these frequent ethical scandals ― and why most Koreans take them as a matter of course. This is not to say that Koreans are less ethical than their counterparts in other countries. But I dare say Korean on average are better than many other nationalities when it comes to street smart survival skills.

So, one may well ask, what may conceivably be done to improve on this situation?

While I have no confidence in pretending I really know the answer, I do certainly understand there is no simple solution. But, if I may be so impudent, my best recommendation is that the new, incoming government might institute a top-to-bottom review of the various ministries' regulations in terms of practicality and overall consistency in purpose. When regulations are found to be impractical or in conflict with each other and yet exist due to legislated law, the next administration should recommend new, corrective laws to be considered by the National Assembly.

Now, that is a big order for any government. So I frankly don't have any confidence that this notion may be possible. But as a somewhat naive foreigner, it would seem to be the most practical solution to this basic predicament.

Regardless, if something similar to my suggestion was to take place, I hope in the end, doing business in Korea may become perfectly clear - or at least, somewhat more so.

Tom Coyner is president of Soft Landing Korea, a consulting group focusing on sales and human resources issues. He is co-author of Mastering Business in Korea: A Practical Guide.