What you should know about South Korea's political scandal: the same old story - but with a twist?

Ingyu Oh @CatchNews | First published: 21 November 2016, 19:33 IST
Park Geun-hye and Chio Soon-Sil
Getty Images

The allegations involving South Korean President Park Geun-hye and her friend of 40 years, Choi Soon-Sil, has all the hallmarks of an old-fashioned scandal in the country. But things are nonetheless not looking good for the president.

The plotline is mundane: Choi allegedly extorted US$69 million from South Korean conglomerates (known as chaebol), including Samsung, Hyundai, LG, Lotte, and others, for personal use - in the form of donations to two foundations she controlled.

If this is true, it has certainly happened before. The practice of extracting slush funds from chaebol is called rent-sharing.

In the past, it has involved companies paying large amounts of money to the president to obtain monopoly rights, gain access to government capital, garner patents, avoid sanctions or punishments, and secure tax reductions. But since thoses bribes were often too big for financially troubled chaebol, they found it necessary to increase their size to multiply their earning capacity. One way to enhance revenue was to invest heavily in new technologies while suppressing unions and their demands for higher wages.

Ultimately, both the chaebol and the corrupt past governments were delighted with the result of rent-sharing. Gross domestic product rapidly increased due to massive exports of high-tech goods to foreign countries at cheap prices. And rent-sharing became a driver of economic growth.

A long tradition

Rent-sharing was first devised during the reign of Park Chung-hee (1961-1979), the current president's late father. During his military dictatorship, no one could openly say anything about his friendship with Choi Soon-Sil's father, Choi Tae-Min, the founder of an obscure sect called the Church of Eternal Life, and later, Crusaders to Save the Nation.

Reverend Choi allegedly had undue influence over the dictator. And when Park Chung-Hee was assassinated by the chief of the Korea Central Intelligence Agency in 1979, pro-democracy movements led by student activists sprouted up all over the country, calling for the imprisonment of all corrupt politicians, bureaucrats, and chaebol owners.

Democratisation finally happened in 1987, after a second military coup in 1979 and the massacre of pro-democracy demonstrators in the southern city of Kwangju in 1980. Despite full democratic reforms that allowed the election of civilian leaders to the presidential palace, the Blue House, civilian presidents continued to imitate the late dictator Park's rent-sharing practices.

President Roh Tae Woo (1988-1992) was indicted and found guilty of raising US$650 million from chaebol owners.

Nobel Peace Prize-winning president Kim Dae-Jung (1998-2002) ended up having to leave the party he founded after his three sons and close aides were found guilty of collecting money from chaebol. The case of president Roh Moo-hyun (2003-2008) was the most tragic of all - he committed suicide while facing allegations of taking US$6 million in bribes.

Egregious allegations

Despite its commonplace theme, the Park Geun-hye allegations seem particularly egregious to many South Koreans because it reminds them of her father's - and Choi's father's - alleged misdeeds. They are embarrassed about this seemingly unending saga consuming the unlikely figure of President Park, whose father is thought to have been assassinated for corruption that involved Choi's father.

Park is refusing to step down from the presidency despite 700,000 demonstrators demanding she do so on November 12. Choi Soon-Sil has been arrested as have two of Park's former aides. And, in a first for South Korean political history, a sitting president is likely to be interrogated by prosecutors. But Park is doing all she can to avoid this.