With the end of South Korean President Kim Dae-jung's term in office just three weeks away, South Korea is rushing into a massive political crisis that has the potential to overturn one of the most important cornerstones of its young democracy -- public trust.
The government's belated confirmation of reports that Hyundai Merchant Marine -- a unit of Hyundai business group -- has used a state bank's loan to secretly funnel US$200 million to North Korea has seriously compromised the integrity of Kim's government.
As staggering as this admission is, Kim's own argument against subjecting this shady deal to a judicial review has touched off a howl of protest. Breaking a long silence over the matter, he told a government board of audit and inspection that recently conducted its probe into the Hyundai scandal that because the payment involved North-South business projects in line with his reconciliation policy with the North, it should be kept out of public accountability.
He even implied that seeking criminal prosecution against such cases could jeopardize the peace and security that he has carefully nurtured with the North during his term in office.
That argument has met with universal condemnation from the media and the opposition Grand National Party in control of the National Assembly. Lying at the heart of this issue is the question of rule of law, not of accommodating or implementing a specific policy. What the average South Korean demands to know is why has this massive loan, originally totaling 400 billion won (US$330 million under the exchange rate of that time), been kept secret from public scrutiny, even though it was approved by a state-run bank. Specifically, the media are asking who was responsible for laundering the money, with help from the intelligence community, and illegally remitting it in clear violation of existing laws.
But probably more troubling than these questions is the persistent allegation from the media and Grand National Party that Hyundai's payoff was intended to "buy" the North's agreement to host the June 2000 summit talks with Pyongyang's dictator Kim Jong-il.
Reports say this money was deposited into Kim's overseas secret bank accounts just a week before the summit was held on June 15. Kim was awarded the Nobel Peace prize that year for his efforts at rapprochement with the North. The allegation has raised the heckle of Kim in effect "purchasing" the honor with Hyundai's payment.
The storm kicked up by the government report is expected to give no peace to the incoming administration of president-elect Roh Moo-hyun. Indeed, it fails to address key questions surrounding the loan, such as who was responsible for approving it and whether more money has gone to the North in connection with Hyundai's deals.
Indeed, Roh's own shifting position on the scandal has been puzzling. Reversing an earlier pledge to get to the bottom of the case through a prosecution probe, he's now backing off by saying the matter should move to the National Assembly as "it raises diplomatic implications and affects our national interests." Taking this cue, the prosecution has called off an official inquiry it promised earlier, in a clear abdication of its constitutional duty.
An extraordinary development of this magnitude can only have adverse impact on efforts to resolve this scandal as soon as possible. Certainly, South Korea should brace itself for loud repercussions from the international society for Hyundai's corrupt deal and Kim's lame defense. A scandal like this is expected to widen the chasm between Seoul and Washington, over crucial policy differences on how to deal with nuclear threats from North Korea.
Timing is particularly bad as the money could be seen as helping the North economically, as well as furthering its nuclear ambitions. North Korea has already become an international pariah state over its development of weapons of mass destruction, singled out by the world community as an outlaw regime bent on producing nuclear and biological and chemical weapons at the cost of starving to death its 2 million people.
The Bush administration's hardline policy on the North is likely to strengthen in the wake of secret financial deals like this, analysts say.
The least Kim can do for his country is to clear the air by letting justice take its course in the investigation of this scandal. Fortunately for Seoul, the opposition majority has submitted a motion demanding an independent counsel to probe Hyundai's case.
The Grand National Party suspects that questionable payments to Pyongyang by Hyundai over the years could total as much as US$1 billion for a variety of projects including railway and road linkages. That's a kind of figure sufficient to shock the world. It may warrant the South Korean Assembly to start a parliamentary hearing to air all suspicions.
When he was leading a dissident movement 25 years ago under the authoritarian regime of the late Park Chung-hee, Kim famously attacked the dictator for using security threats from the North to justify curtailment of civil liberties. Today, he finds himself imitating Park by suggesting that demand for accountability in Hyundai's money-for-summit deal runs the risk of threatening the ongoing peace process with the North. "[Investigation of this] case should not bring a halt to the ongoing inter-Korean affairs and damage relations between the two Koreas," he said recently.
Many Koreans ponder this paradox as they watch Kim inching closer to the end of his term in office, engulfed in the flames of the Hyundai deal.
Shim Jae Hoon is a Seoul-based journalist and commentator.
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