So it's official now. The Hyundai group's secret payoffs to North Korea amounted to US$500 million, not US$200 million as previously reported. It's a payment for the exclusive right to undertake industrial projects, a kind of license fee rather than a straight bribe, Hyundai claims. But the payment did help set up the landmark June 2000 summit talks between South Korean President Kim Dae-jung and North Korean dictator Kim Jong-il, according to Hyundai Asian chairman Chung Mong-hun, despite denials by Kim.
The confirmation is shattering, if not necessarily new. It only goes to show how damningly accurate the media reports have been since last September, when the allegation to this effect first surfaced. It deepens South Korean society's disappointment in Hyundai's disregard for business ethics and it has shaken the public's confidence in Kim's leadership and behavior. The scandal undermines the trust placed by allies Japan and the US as they try to coordinate response to the threats posed by North Korea with its weapons of mass destruction. Seoul has ended up sending cash to a rogue state developing nuclear weapons in defiance of global concern.
Hyundai denies its payment amounted to a "bribery." Or that it was done to help promote President Kim's "sunshine" policy. But somehow, all these elements fall into a clear pattern even as Kim rejects the link between the payoff and summit talks. Consider this: his top intelligence official, Lim Dong-won, who now is the chief policymaker on reconciliation policy, has admitted to helping exchange US$200 million for remittance to the North.
Park Jie-won, Kim's chief of staff, has retracted his earlier denial and now admits to traveling overseas to meet with North Korean representatives to arrange for the summit talks, in the presence of Hyundai's Chung.
All this begs for clarification: exactly how much money was secretly sent to Pyongyang? What was the government's role and motivation in authorizing the various bank loans to Hyundai companies shortly before and after the June 15 summit?
More specifically, is it true that Kim's chief secretary called up the Korea Development Bank to instruct an emergency loan to Hyundai Merchant Marine? According to media reports, Hyundai has received a total of 36 trillion won (a whopping US$30 billion) in new loans and rollovers in connection with its North Korean projects. That's 20 percent of the entire public funds the Kim government released to bail out banks and businesses hit by the 1998 Asian financial crisis. Speaking before a nationally televised session with the media, Kim said he would assume all responsibility for wrongdoing in the case. He apologized for ignoring the law in allowing the illegal payoffs by Hyundai, saying dealing with national security concerns sometimes required extralegal steps. For all his commitment to transparency and clean government, however, Kim refused to divulge other details. His statement only increased the public's curiosity. What was left unsaid appeared to be more important than the meager facts he offered.
The staggering amount of tax-payers' money reportedly mobilized to support Hyundai's North Korean ventures; and clandestine deals and illegal transfers employed -- should not go uninvestigated by the proper authorities. It's not only a matter of political indiscretion and excesses, it borders on criminality, according to the opposition Grand National Party. Suspicions of illegality here include the government's intervention in arranging inappropriate loans for the Hyundai group of companies; the nation's top intelligence (then under Lim's leadership) organization lending its hand in transferring large amounts of money to the North; and covering up facts even while the National Assembly was calling for a full disclosure. South Koreans have been outraged. Opinion polls show a high level of distrust running against Kim. One survey indicates over 56 percent of those polled demanding appointment of an independent counsel to investigate the case; another 73 percent said the matter should move to the National Assembly for full investigation by special prosecutors.
That leaves no option for the ruling party but to agree to move the case to parliament for exhaustive inquiry, especially as the prosecution authorities have refused to probe the case. The assembly must deal with two overriding issues: the exact amount of money sent to the North; the role of individuals around the President responsible for clearing the payoffs; why such large loans were approved for Hyundai even while the government refused similar loans to other business groups.
Kim repeatedly has argued against subjecting the payoff scandal to a judicial review, insisting that it damages the ongoing reconciliation process. He even suggested that getting to the bottom of the scandal could threaten the peninsula's peace by provoking the Pyongyang regime. The overriding need for national security sometimes demands extralegal ways of dealing with the North, he said defending the Hyundai deal.
Those arguments would have been valid if the case did not involve a private business entity -- Hyundai. Or if the government did not reward Hyundai with preferential bank loans. Neither the government nor Hyundai has been able to answer why this particular money transfer was kept secret if it was a legitimate business payment. The secrecy surrounding this particular deal is even more mystifying as other Hyundai payments to the North were carried out with official government approval.
But the biggest casualty of this scandal is the "sunshine" policy itself. The clandestine payoff has undermined the moral authority underpinning the reconciliation policy with the North. Domestically, it erodes efforts to shape a national consensus behind this historic initiative.
The incoming administration of president-elect Roh Moo-hyun faces a formidable task of rebuilding the North Korean policy in the midst of widening public cynicism over the scandal. From now on, Seoul may have to contend with the North's demand for payment every step on the way to dialogue and negotiation. That undoubtedly will be one of the most negative legacies that Kim will be leaving behind for his country and his successor.
Shim Jae Hoon is a Seoul-based journalist and commentator.
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