Improvement on anti-corruption indexes to help Korea attract FDI

Anti-Corruption and Civil Rights Commission (ACRC) Chairperson Jeon Hyun-heui speaks during an interview with The Korea Times at the Government Complex in Seoul, Feb. 9. Courtesy of ACRC

Anti-corruption agency chief stresses national integrity as precondition for advanced country

By Nam Hyun-woo

Korea is showing improvements in indices gauging its integrity and transparency systems, and the country's strengthened anti-corruption efforts will attract foreign investors, enabling further economic growth, according to the chief of the national anti-corruption agency.

"The Korean economy is now among the world's 10 biggest economies and some experts say the country deserves to be described as a member of the Group of Eight," Anti-Corruption and Civil Rights Commission (ACRC) Chairperson Jeon Hyun-heui said during an interview with The Korea Times, Feb. 9.

"It is true that Korea's economic and national status has been elevated, but it is hard to say it is an advanced country if it is corrupt or not transparent. Korea's recent improvements in global integrity indices show that the country is becoming more transparent and progressing as a developed nation."

Jeon's remarks came after Korea scored a record high of 62 out of 100 in last year's Corruption Perceptions Index (CPI) released by Transparency International, Jan. 25. It was the 32nd highest score out of 180 countries and territories.

Korea's ranking and score increased by 1 notch and 1 point from those of 2020, respectively, marking the fifth consecutive years of improvements.

Jeon said it was "a desirable outcome," noting the index showed a year-on-year improvement despite a major real estate speculation scandal last year involving a state-run home developer, the Korea Land & Housing Corporation (LH).

The entire nation was outraged in March last year when a civic group revealed that LH employees used privileged information to cash in on government housing development programs. Criticisms mounted on the country's anti-corruption efforts and the Moon Jae-in administration's integrity, resulting in the ruling party suffering a crushing defeat in by-elections a month later.

Since the CPI gauges outside perceptions of a country's integrity, the scandal, which was even reported by foreign media outlets, was feared to snap Korea's five-year streak of an uptrend on the index.

"If we had done nothing after the so-called LH scandal, it may have given foreign investors the wrong impression that such an irregularity could happen again in Korea," Jeon said.

"Since the scandal, we have made every effort to rule out the possibility of public officials pursuing profits by exploiting their position by enacting the Prevention of Conflict of Interest Related to Duties of Public Servants Act ― and I believe this was taken into account in last year's CPI score."

The act, which will take effect May 19 this year, prohibits public officials from pursuing personal profit related to their professional duties. Those who violate the act could face up to seven years in prison.

Since the act may affect foreign investors seeking to do business in Korea, Jeon said the ACRC is making efforts to explain the new regulation to foreign companies. On Jan. 14, the ACRC held a webinar with the American Chamber of Commerce in Korea for Jeon to explain the new anti-corruption rule to participants.

Economy and integrity

Though Jeon acknowledged that the LH scandal prevented Korea from achieving the Moon government's goal of being placed No. 20 in last year's CPI ranking, she noted that other integrity indices are showing noticeable improvements, pushing up the country's attractiveness to investors.

Last year, the Berlin-based European Research Center for Anti-corruption and State-Building ranked Korea No. 18 out of 114 assessed countries in its Index of Public Integrity, the highest placement among Asian nations. Also, Korea received its highest ranking of 21st among 194 countries in the Bribery Risk Matrix tracked by the U.S.-based TRACE International, and was classified as a country group of "low risk" with regards to bribery.

"Those indices have a more objective evaluation on a country's integrity and transparency, and Korea logged higher scores compared to the CPI, meaning the country is improving," Jeon said.

"Because the Moon administration was inaugurated with the goal of rooting out corruption, making the country fair and transparent was one of the most important issues on the state agenda. And I believe that improvements in the indices are major achievements of the administration."

President Moon took the office in 2017 after his predecessor Park Geun-hye was impeached because of a corruption scandal involving her confidant Choi Soon-sil. Against this backdrop, Moon has been stressing the government's transparency and integrity as its main philosophy, although there are mixed views on whether the government was successful in eradicating corruption, which are frequently described as "deep-rooted evils."

Jeon said the country's improved transparency is a crucial precondition for its economic growth, because the integrity of government systems enables firms to manage administrative and political uncertainties for their businesses.

"Let's say you are running a business and you have to bribe government officials to get administrative approval on issues related to your business. It comes as a risk for companies, preventing them from focusing on business fundamentals," Jeon said. "A country's transparency becomes a launch pad for companies operating in it to concentrate on its productivity and achieving growth."

Studies published in 2007 and 2008 in The European Physical Journal found that countries and territories experienced gross domestic product increases of 1.7 percent for every point added to their CPI score. Jeon also made a similar assumption that a 10 point increase on the CPI would result in up to a 65 trillion won ($54.28 billion) increase in Korea's GDP.

In its 2016 report, "Putting an End to Corruption," the OECD said the probability of foreign direct investment was 15 percentage points lower in countries with a strong level corruption than in countries relatively free of it.

"For foreign investors, national transparency is a signal lowering their risks," Jeon said. "The country now has two major schemes preventing public officials from receiving bribes ― the Improper Solicitation and Graft Act ― and pursuing personal gain ― the Prevention of Conflict of Interest Related to Duties of Public Servants Act. And we believe these are superior national anti-corruption systems compared to those of other advanced nations."

The Improper Solicitation and Graft Act is better known as "Kim Young-ran act," named after former ACRC Chairwoman Kim Young-ran, who proposed making it illegal for public officials and journalists to accept gifts of more than 50,000 won or being treated to meals that cost over 30,000 won per person. It took effect in September 2016.

Anti-Corruption and Civil Rights Commission (ACRC) Chairperson Jeon Hyun-heui, right, speaks during a webinar on the new Prevention of Conflict of Interest Related to Duties of Public Servants Act, held jointly with the American Chamber of Commerce in Korea, Jan. 14. Courtesy of ACRC

Expats' rights

Jeon said the ACRC is striving to improve foreign companies and expats' rights, by operating the public petition system.

Currently, it is running the e-People public petition system in 14 languages, allowing expats to upload petitions and receive answers in their native language.

Also for those who prefer phone calls, the ACRC is operating the 110 call center, to answer questions from expats in their native languages.

For foreign companies, the ACRC launched the Foreign Enterprises Ombudsman in March last year, to allow businessmen to file petitions about perceived corruption or other government-related difficulties.

"As well as anti-corruption efforts, the ACRC is also in charge of public petitions," Jeon said. "Just like we address Koreans' petitions, we also address petitions, and improve systems for foreign companies in Korea. The ACRC will spare no effort in helping expats and foreign companies suffering from unfair administrative action and corruption."

However, Jeon admitted that the government's current petition system is too complex and unfriendly to not only foreigners but also Koreans as well, and so the ACRC is seeking to introduce a more integrated platform.

"The ACRC received approximately 17 million petitions last year through various channels," Jeon said. "But there have been complaints that people don't know where to file their petitions, and also that the process is too difficult to understand. To address this problem, we want to introduce an integrated artificial intelligence (AI) based petition platform, which automatically delivers various petitions to related ministries or other government agencies."

According to Jeon, the AI system will be based on the ACRC's accumulated petition data, related laws, judicial precedents and other information, and it will be able to address more than half of the petitions the ACRC receives annually linking the petitioner and government officials.

"If this is connected with metaverse technologies, it will serve as a platform which can address public petitions more efficiently," Jeon said. "When this is developed further, public opinion can be directly gathered and reflected into actual policies, allowing the public to create government policy that better serves their needs by themselves."