Anti-graft law still elusive for European firms

Chairwoman Pak Un-jong of the Anti-Corruption and Civil Rights Commission, second from left, speaks during a round-table meeting with members of the European Chamber of Commerce in Korea at Seoul Square, Wednesday. / Courtesy of Anti-Corruption and Civil Rights Commission

By Park Jae-hyuk

Leaders of European companies raised unresolved questions about the anti-graft law during a round-table meeting this week with the Anti-Corruption and Civil Rights Commission (ACRC).

The so-called Kim Young-ran Act, named after the former Supreme Court justice who first drafted it, bars civil servants, journalists and teachers, as well as their spouses, from accepting gifts and meals worth more than 50,000 won ($44) and 30,000 won, respectively.

Given that the law went into effect almost a year ago, doubts may appear that the government has failed to explain the law to foreign businesses in detail.

Jointly hosted by the ACRC and the European Chamber of Commerce in Korea (ECCK), Wednesday, the meeting aimed to deal with the difficulties of doing business here for foreign companies.

The entrepreneurs at the venue, however, paid more attention to details about the anti-graft law.

ECCK President Christoph Heider asked about offering entertainment for public officials during an event in other countries. He said the limit may be too low in some countries, such as Switzerland, and the currency exchange rate can differ from bank to bank and country to country.

An ACRC official explained that official events are not subject to the price limit of gifts offered to public officials and there has yet to be any benchmark currency exchange rate. He also said the 30,000 won limit may change depending on opinions from the public.

Lincoln Park of Procter & Gamble asked a question about the term, “duty-related,” asking whether it is okay to offer a meal worth less than 30,000 won, citing professors and teachers who cannot receive a can of coffee from their students.

The ACRC official explained that schools are subject to stricter regulations than businesses, because some instructors abused their positions by accepting money from parents.

In addition to questions about the anti-graft act, the participants complained about their difficulty in conducting business here, including regulations and the government’s discriminatory measures in favor of Korean firms.

Heider said a European company failed to win against a relatively smaller Korean company in a bid for public procurement because the European firm did not have a branch here. Park urged the government to listen to experts and businesses when it deals with safety standards, rather than relying only on civic groups.

Deutsche Bank CFO Andrew Lindsay complained about double taxation from several local governments, which heavily weigh on financial companies.

IKEA Korea’s country retail manager Andre Schmidtgal pointed out vague regulations and different stances of local governments when they sign win-win contracts with large retailers for the sake of small local sellers. He avoided directly mentioning the government’s regulations in a press conference a day earlier.

Although the ACRC could not offer proper answers for the issues during the meeting, Kim Eui-whan, the ombudsman of the ACRC, promised to discuss the complaints with related institutes, so as to come up with fundamental solutions.

The ACRC and the ECCK also promised continuous cooperation with foreign businesses.

“I think foreign businesses have made significant contributions to the Korean economy, by creating jobs and thus enhancing Korean’s rights and interests,” ACRC Chairwoman Pak Un-jong said at the meeting. “You’ve also played important roles in enhancing integrity in Korean society by inspiring a global mindset in the Korean business environment.”

Citing the beginning of the new Ministry of SMEs and Startups, the chairwoman also said that small-business friendly policies will help strengthen cooperation with countries and companies in Europe.

In response to her promise to help European companies facing unfair practices by Korean public officials, ECCK Chairman Dimitris Psillakis said the members are open to cooperation with the ACRC to enhance compliance systems in Korea.

“We strongly believe that the close economic partnership between Europe and Korea will further improve,” said Psillakis, who is also the CEO of Mercedes-Benz Korea.

The attendees included Pak, Psillakis and heads of companies taking part in ECCK.

Officials of nine related institutes ─ the Ministry of SMEs and Startups, the Ministry of Employment and Labor, the Ministry of Environment, the Korea Customs Service, the Seoul Metropolitan Government, the Gyeonggi Provincial Government, the Small and Medium Business Corporation, the Korea Immigration Service and the Korea Institute of Startup & Entrepreneurship Development ─ also attended the meeting.