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Korea's Policies for Anti-Corruption & Integrity

2007. 8

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Contents

Background I

Korea's Anti-Corruption Policies Ⅱ

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Korea's population & economy

Evaluation of Korea's Integrity

I Background

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1. Korea's population & economy

Year Total population(unit: million)

Nominal GDP(billion)

Per capita GNP($)

Central gov't Expenditures (billion)

Economicgrowth rate(%)

1970 32.241 3.0 254 0.93

1975 34.707 11.2 602 3.32 5.9

1980 38.124 42.1 1,645 11.62  -1.5

1985 40.448 91.3 2,309 20.07 6.8

1990 42.869 202.9 6,147 41.82  9.2

1995 45.093 433.5 11,432 97.42 9.2

2000 47.008 628.9 10,841 165.49 8.5

2001 47.357 676.2 10,160 175.80  3.8

2002 47.622 743.7 11,499 188.35  7.0

2003 47.859 787.6 12,720 208.58  3.1

2004 48.039 847.1 14,193 199.12 4.7

2005 48.138 880.9 16,413 209.13 4.0

2006 48.297 921.6 18,372 219.63 5.0

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2. Evaluation of Korea's Integrity

1) Domestic Evaluation

6.43

7.718.38

8.68 8.77

4.13.5

1.50.9 0.7

2002 2003 2004 2005 2006

Overall Integrity(score)

Provision of bribe & entertainment (%)

Korea's Integrity Perceptions Index

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2. Evaluation of Korea's Integrity

1) Domestic Evaluation

Perception Changes by Corruption Type since the Inception of the Roh Mu-Hyun Administration

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2. Evaluation of Korea's Integrity

2) International Evaluation

Korea’s constant improvement in the fight against corruption is recognized on the global stage

classification 1998 1999 2000 2001 2002 2003 2004 2005 2006

Score(on a scale of 1 to 10)

4.2 3.8 4.0 4.2 4.5 4.3 4.5 5.0 5.1

Percentage(rank / total of countries)

50.5%50.5%(50/99)

53.3% 46.1% 39.2% 37.5% 32.1% 25.1%25.7%

(42/163)

Corruption Perception Index (CPI) Trend (on a 10-point scale)

※ Source: Corruption Perception Index of Transparency International

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2. Evaluation of Korea's Integrity

Economist Intelligence Unit democracy index 2006

According to the Bribing and Corruption Practices Index (BCPI), annually published

by the International Institute for Management Development (IMD), Korea's score rose

from 2.9 in 2004 to 4.4 in 2005.

 

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Beginning Phase of Anti-Corruption Policies

Initial Phase of Anti-Corruption System Formation

Ⅱ Korea's Anti-Corruption Policies

3 Full-fledged Implementation of Anti-Corruption Systems

4 Korea's Anti-Corruption System

5 Tasks to Be Resolved and Policy Direction

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1. Beginning Phase of Anti-Corruption PoliciesFrom Government Establishment to Noh Tae-Woo administration (1948~1993)

1) Background

Korea was liberated from the Japanese colonial rule in 1945 and went

through the Korean War (1950~1953), resulting in a country divided into the

North and the South. The chaotic circumstances devastated industries and

depleted both resources and a skilled workforce, creating a vicious circle of

poverty. The Korean economy mostly depended on overseas aid throughout

the 1950s and into the early 1960s.

From the mid-1960s to late 1980s, the South Korean government aggressively

led economic development while bringing in foreign capital for full support.

Strategic funds, tax credits and other forms of preferential treatment were

provided to export-related industries and the heavy chemical industries.

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1. Beginning Phase of Anti-Corruption Policies From the Government Establishment to the Noh Tae-Woo administration (1948~1993)

2) Policy achievement

During the government-led economic development drive, anti-corruption efforts focused only on prosecution and punishment rather than on reforming the corruption-prone socio-political structure and systems.

Anti-corruption policies were mainly end-of-pipe measures with the Board of Inspection and the Social Purification Committee playing an important role. Punishment mainly focused on low-ranking officials rather than the powers- that-be, helping to create a vicious circle of corruption and punishment without fundamental reforms. Under these circumstances, the perpetrators of corruption resorted to clandestine and crafty methods that allowed government officials to simply do nothing.  

Despite the government's anti-corruption drive, corruption became more rampant while mistrust over the government intensified, largely because most corruption cases concerned power abuse and collusion between politics and business circles, particularly the large conglomerates.

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2. Initial Phase of Anti-Corruption System Formation The Administrations of Kim Yong-sam and Kim Dae-jung (1993~2002)

1) Background

From the early 1990s, Korea underwent rapid political democratization with the transition from 30 years of military regimes to a civilian administration.

Korean companies failed to respond to the ongoing wave of the globalization in the 1990s, including market opening. The Asian financial crisis spread to Korea by late 1997, significantly impacting the Korean economy.

The South Korean government blamed the financial crisis on the resistance to the transition to a full market economy and a social structure prone to corruption, including, collusion between politicians and businessmen and ineffective government regulations.

Recognizing this, the government launched an intensified reform campaign administration-wide, including the establishment of an anti-corruption system.  

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2. Initial Phase of Anti-Corruption System Formation The Administrations of Kim Yong-sam and Kim Dae-jung (1993~2002)

During the Kim Yong-sam Administration (1993~1997), - Introduced of the fundamental anti-corruption programs - Established the Corruption Prevention Committee (an advisory body of the Board of Audit and Inspection) and Administrative Reform Committee

During the Kim Dae-jung Administration (1998~2002), - The Anti-Corruption Act and the Money and Laundering Prevention Act were enacted - The Presidential Commission on Anti-Corruption and the Financial Intelligence Unit were establishd - Administrative regulation reforms were undertaken - The System for Administrative Information Disclosure was adopted

Accounting standards became more transparent and sophisticated, while corporate governance was improved as part of efforts to meet the international standards of accounting and corporate responsibility.

2) Policy achievement

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2. Initial Phase of Anti-Corruption System Formation The Administrations of Kim Yong-sam and Kim Dae-jung (1993~2002)

Previously, the government had acted alone in the anti-corruption efforts. Under the civilian governments, however, civic groups such as the People’s Solidarity for Participatory Democracy(1994), Korean Solidarity for Anti-Corruption(1995), Center for Transparent Society(1996), Citizens’ Coalition for Better Government (1997) and YMCA became broadly and proactively involved in the fight against corruption. As a result, more public pressures was exerted on the elimination of corruption and irregularities related to power abuse. 

However, these anti-corruption efforts were not sufficient. The legacies of collusion between politicians and businessmen persisted; excessive campaign funds were collected for a minority ruling party to gain ground.

Nepotism-related corruption occurred, too, involving the relatives of both Presidents.

2) Policy achievement

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3. Full-fledged Implementation of Anti-Corruption Systems The Roh Moo-hyun Administration (2003~present)

1) Background

Building on strong support from the civil society, Roh Moo-hyun was elected President, and his administration designated government reform and a fight against corruption as major policy goals.

President Roh Moo-hyun declared that he would not seek political gain from the misuse of the Prosecutors' Office, National Intelligence Service and various parties previously regarded as powerful institutions.

This declaration highlighted a commitment to eradicating corruption. President Roh has presided over the inter-Ministerial meeting on anti- corruption and vigorously pursued anti-corruption policies. 

On the administrative front, existing anti-corruption systems are now implemented more systematically, with KICAC playing a leading role. 

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3. Full-fledged Implementation of Anti-Corruption Systems The Roh Moo-hyun Administration (2003~present)

2) Anti-corruption Measures

Establishment the Inter-Ministerial Meeting on Anti-Corruption

Pursuit of reforms and anti-corruption measures in the influential government

organizations

Reform of the political sector

Introduction of online systems for transparent administrative process

Disclosure of the results of Integrity Survey of public institutions

Establishment of systems for protecting and rewarding whistle-blowers

Provision of recommendations

Introduction of Corruption Impact Assessment

Introduction of the Citizen Audit System and the Citizen's Recall System

Signing of the Korean Pact on Anti-Corruption and Transparency (K-Pact) by

the public, political, economic sectors and civil society

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4. Korea’s anti-corruption system

1) Anti-corruption bodies

Organization Foundation

Year Key functions

KICAC 2002 - formulate and coordinate national anti-corruption policies

Board of Audit and Inspection 1963 - act as watchdog role over public organizations and public officials

Supreme Prosecutors' Office 1948 - investigate corruption scandals and punish offenders- enhance public order

National Police Agency 1948 - investigate corruption scandals and punish those responsible - enhance public order

Public official's ethics committee 1990 - carry out duties related to registration, disclose personal assets of public officials and restrict employment of retired public officials

Korea Financial Intelligence Unit of Ministry of Finance and Economy

2001 - collect and analyze transaction data concerning money laundering

Audit Committee of each ministry 1948 - act as auditor and inspector

Fair Trade Commission 1996 - ensure fair trade practices

Financial Supervisory Commission 1998 - help create a sound financial order- protect financial customers

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4. Korea’s anti-corruption system

2) Key function of KICAC

Formulate and coordinate the national anti-corruption policies

Make recommendations on eliminating corruption-causing factors in laws and regulations that govern corruption-prone areas

Evaluate the progress of policy steps which public organizations have taken to prevent corruption

Receive reports of corruption while protecting and rewarding whistleblowers

Promote international cooperation for corruption prevention with private and global organizations

Ensure the implementation of the Code of Conduct for Public Organization Employees

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4. Korea’s anti-corruption system

3) Major anti-corruption systems

Establishment and coordination of anti-corruption policies at the national

level

- Policies to enhance integrity and fight corruption are established and coordinated at the

national level.

- The president presides over the Inter-Ministerial Meeting on Anti-Corruption to help

eliminate a structure and systems conducive to corruption and to strengthen

cooperation among government organizations on anti-corruption efforts.

Corruption prevention

- Establishment of the Administrative Reform Committee

- Introduction of the System for Administrative Information Disclosure

- Improvement in systems related to corruption-prone areas

- Adoption of the Corruption Impact Assessment

- Operation of online systems for transparent administrative process

- Evaluation of the integrity at public organizations

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4. Korea’s anti-corruption system

3) Major anti-corruption systems

Investigation & punishment

- Establishment of the Corruption Report Center

- Introduction of the system for protecting and rewarding whistleblowers

- Operation of an internal audit committee within each ministry

Public ethics

- Implementation of the Code of Conduct for Public Officials

- Introduction of Confirmation Hearings on the appointment of high-ranking officials

- Registration and disclosure of public officials’ personal assets

- Employment ban on public officials associated with a corruption case

Cooperation between the private and public sectors

- K-Pract, the Citizen Audit System, the Citizen's Recall System and various anti-

corruption activities of civic groups

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5. Tasks to be resolved and Policy direction

1) Tasks to be resolved

When public ethics are lacking, cronyism and paternalism, regarded as part of Korea's traditional customs, serve as corruption-causing factors.

Decision-making process are not transparent enough. For example, many committees still depend on unfair policy-making processes, and retired public officials make lobby on behalf of their organizations.

Some local politicians and business people share inappropriate ties that result in corrupt practices.

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5. Tasks to be resolved and Policy direction

2) Policy direction

Anti-corruption efforts will continue based on vigorous prosecution and

punishment against irregularities and corruption, and on the system for

protecting and rewarding whistleblowers. At the same time, the Code

of Conduct will be strictly implemented to enhance ethics in the public

sector with importance placed on transparency of decision-making

processes and responsibility. Institutional improvements will be made

to increase the transparency of corporate accounting, while further

measures for corporate ethical management will be adopted.  

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Annex

Inter-Ministerial Meeting on Anti-Corruption 」 (2004)

Code of Conduct for Public Officials (2003)

Confirmation hearings on appointments of senior officials (2003)

Integrity Survey of Public Organizations (2003)

Enhanced system for an ethical and transparent management of businesses

Elimination of corruption concerning power abuse (2004)

Institutional Improvement for Corruption-prone Areas System for protecting and rewarding whistleblowers(2005)

Horizontal partnership and the K-PACT (2005)

Citizens Recall System (2007)

International Cooperation in Combating Corruption

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