Korea faces major changes on anti-graft law

Government urged to take steps to reduce side effects

By Jung Min-ho, Choi Ha-young

The anti-graft law, due to coming into force in two months, is expected to bring major changes to Korean society where gifts and expensive meals still constitute vital elements of business.

Analysts and company officials called for the government and the legislature to take complementary steps to minimize negative side-effects on the economy.

“Expensive food and drinks, and golf have long been an important part of business in this country, but the law will change this,” a civil servant, who refused to be named, said. “Such a business culture has created connections among businessmen, public servants and journalists, but those days are over, at least legally.”

The law, known as the Kim Young-ran Act, aims to cut the chain of corruption by putting a cap on whatever goes to regulators and media employees as “gifts.” About 4 million public servants, private school teachers, media workers and their spouses should not receive meals and gifts exceeding designated price limits when the law takes effect Sept. 28.

Kim Sang-jo, a professor at Hansung University, said that Koran society will be able to withstand the short-term costs stemming from the anti-corruption law.

“Short-term confusion and costs seem unavoidable, but not to the extent of not handling it. The law could have various side-effects,” Kim said. “But we are in a situation where we can introduce such a hard law to root out corruption and opaqueness.”

He said lack of transparency is a serious problem for Korean society and the law will provide momentum for the country to move toward becoming a better one.

But he cautioned against a too stringent application of the law in too short a period of time.

“We cannot solve our society’s long-established problems overnight with a law. It will take time to see the law take effect in the public sector,” he said.

The law is expected to force companies to change the way they do business.

“Building relationships with journalists for publicity is an important part of my job, and this often involves multiple rounds of alcohol at different venues, which costs more than the price limit for one meal,” an official from a Seoul-based PR agency said. “Many people in the PR business, including myself, are still confused about the law.”

The law sets 30,000 won ($27) as the maximum value of one meal that a person can be treated to if they are directly work-related. The maximum value of a gift of any kind is 50,000 won. Even if they are not work-related, the value of whatever a person receives should not exceed 1 million won on one occasion and a total of 3 million won in one year to avoid prosecution.

Weekend golf and drinking at hostess bars — common practices in Korea’s business culture — will likely be heavily affected by the law. Given that Koreans spent 1 trillion won on drinking at such bars last year alone, the impact is expected to be large.

A teacher who works in a private high school in Seoul said the law will also accelerate efforts to root out “gift culture” in schools.

“In the short run, many people will remain confused. A negative impact on the economy is also expected,” Kim said.

“Yet change is overdue. Korea at this point needs such a law to move forward, even if it costs a lot. The law finally created the momentum it badly needed.”

According to Transparency International, a Berlin-based global organization dedicated to anti-corruption, Korea ranked 27th in the corruption-perceptions index last year among 34 members of the Economic Cooperation and Development.

On Thursday, the Constitutional Court ruled that the new graft act is constitutional, rejecting all complaints challenging its scope, and its vagueness.

The effect of Korea’s previous bribery law was long questioned and criticized as “almost useless” because it could not prosecute those who received gifts unless evidence showed that they are given for specific favors.

The law was proposed in 2011, after a prosecutor who received a Mercedes Benz ended up being found not guilty.