Country Report South Korea March 2011

The political scene: The domestic political scene remains volatile

On February 18th the two main parties, the ruling conservative Grand National Party (GNP) and the centre-left opposition Democratic Party (DP), finally agreed to open an extraordinary session of the National Assembly (parliament) after a two-month impasse. The special session will continue until March 22nd. Lawmakers made up for lost time, passing 37 pending bills and electing a new chair of the parliamentary committee for culture, sports and tourism, as well as a new member of the Human Rights Commission. They also established five special committees, each of which cover a different topic including inter-Korean relations, political reform and domestic social issues. These bodies will sit until August 17th.

Not all has gone well for the government, however. Corruption scandals are a dismal, hardy perennial in South Korea. On February 16th-the birthday of North Korea's leader, Kim Jong-il, and thus a public holiday in the North-South Korea's president, Lee Myung-bak of the GNP, lost one of his closest political allies when Chang Soo-man resigned as head of a government weapons-purchasing body, the Defence Acquisition Program Administration. A former vice defence minister and career official, Chang Soo-man was not only a main figure in the current round of modernising military procurement systems, but had earlier been the brains behind some of Lee Myung-bak's major pledges during his 2008 presidential election campaign, including his 747 slogan: to attain 7% annual real GDP growth, to reach per capita income of US$40,000 and to become the world's seventh-largest economy. (Although these aims were much derided during Lee Myung-bak's election campaign, in 2010 South Korea became the world's seventh-largest exporter of goods and posted real GDP growth of more than 6%.)

Chang Soo-man's sudden resignation appears to involve two separate scandals. The immediate of these is known as "Hamba-gate", after the Korean word for workers' canteens on construction sites. These canteens are lucrative; a businessman and broker, Yu Sang-bong, is accused of widespread bribery to obtain such franchises. This scandal has already engulfed a former national chief of police, Kang Hee-rak, who was arrested on January 27th on suspicion of accepting some US$170,000 in bribes from Yu Sang-bong. Others who were summonsed include a former head of the coastguard, Lee Gil-bum. Also under suspicion is a former presidential aide, Bae Geon-ki, whose remit was to investigate corruption among staff in the Blue House (the official residence of South Korea's president) and their relatives. (Bae Geon-ki resigned on January 10th.)

Separately, on February 18th Chang Soo-man was questioned by prosecutors about whether he had received gift certificates from Daewoo Engineering and Construction, a division of a chaebol (a South Korean conglomerate), Daewoo. In 2010 the Daewoo division won a US$43m contract to relocate the Special Warfare Command, the body responsible for South Korea's special forces, and an airborne unit. Chang Soo-man was deputy defence minister at the time.

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