Anti-graft law sets uncharted course for firms
The following is the first of a series on the anti-graft law, known as the Kim Young-ran Act, which could possibly change Korean society drastically. ― ED.
By Yoon Ja-young
With an anti-graft law taking effect from today, businesses are taking care not to violate the so-called Kim Young-ran Act. They are pursuing a major overhaul in the way they have been doing business, especially in public relations (PR), dealing with government officials and marketing.
Yu, a manager at an insurance company, said he is minimizing meetings with officials from the financial regulator.
“I used to have meetings with officials for consultation, but we agreed that we had better avoid meeting. We don’t want to be the first ones to violate the law and make the headlines,” he said.
Previously, Yu used to pay for the meal after such meetings with a corporate credit card. This, however, may violate the anti-graft law. The law, which was named after the former Anti-Corruption and Civil Rights Commission (ACRC) chief who first proposed it, regulates free meals or gifts, or diverse solicitations. It affects not only government workers but also private school teachers and journalists, as well as their spouses.
Yu said that most of the consultation between his business and the financial regulator will be done through e-mails, at least for the time being. However, he doubted whether it will be an effective way of doing work. “Meeting face-to-face and opening each other’s heart has been important in Korean culture. There are some topics that are better discussed face-to-face. But for now, there is no choice.”
Businesses are holding briefing sessions for their executives and employees so that they will not break the law. The Korea Chamber of Commerce and Industry organized a meeting with the ACRC chief, where around 250 CEOs attended to learn about the act. The Federation of Korean Industries also organized briefings for member companies. Samsung Group held a briefing session for executives, while LG Electronics made online education programs to help employees and executives get acquainted with the law. SK Group handed out guidelines for subsidiaries as well as making an animation to help them better understand the law.
Foreign companies are not an exception when doing business in Korea. “As a foreign company, we already have solid self-regulating guidelines and have been accustomed to following them,” a spokeswoman at IBM Korea said. “As the new anti-corruption law is being introduced, we have rearranged our guidelines and implemented staff training for the new rules and possible applications to our business.”
However, most of those affected by the law complain it is vague. “We had a briefing session by a company lawyer last week, but he simply read the guidelines provided by the ACRC. When we ask about specific cases, each expert seems to have a different opinion. The lawyer said that we had better wait until someone violates the law first and then see how the court deals with it,” said a worker who attended the session.
Hence, most businesses are choosing a low key strategy, focusing on minimizing risks. Lee, a manager in charge of PR at a construction company, has no dinner appointments in October. It contrasts with his calendar this month which is full of appointments with reporters almost every day, until Sept. 28 when the anti-graft law comes into effect.
Lee said he is confused now as he will have to overhaul the way he had been doing his job. “The meetings were not simply for promoting my company. PR persons are also often in charge of gathering information and rumors in the industry, to report them to top management. They need to be informed of diverse risks to navigate the company through it all. That was the biggest part of my job, but it will be difficult to do it now.”
He expected that the businesses will have to resort to lobbyists in the end. “It will cost much more than now. I doubt whether small companies can handle the cost. I think it will trigger many changes after just a few months.”