CORRUPTION Syndromes of Corruption

Elite Cartels 107
and charities. During the 1980s and early 1990s, such contributions ran
as large as 22 percent of net profits (Woo, 1991: 9). This immense cash
flow helped maintain party and legislative organizations and rewarded
key bureaucrats and military figures for their loyalty. A significant portion
also underwrote the cost of huwo˘nhoe or ‘‘personal vote’’ practices
(Kang, 2002a: 99) – gift-giving and vote-buying similar to those seen in
Japan (Park Byeog-Seog, 1995: 168–172 describes a typical National
Assemblyman’s political income and outlays). Some money stayed in
the pockets of top politicians, although in the Park years it seems personal
enrichment was secondary to building an elite network strong enough to
hold power and to pursue growth (Kang, 2002a). Later, as democratization
proceeded, some of the funds were slipped to opposition parties and
leaders in order to keep them compliant (Pye, 1997: 220). In return for
their money chaebols got access to capital and foreign exchange on preferential
terms, light or non-existent regulation, and labor peace guaranteed
by state repression. Until 1993 assets and property could be held
under fictitious names or those of relatives, and money borrowed at
preferential government interest rates could be re-lent at much higher
rates. Favored chaebols pursued their own collusive economic practices
such as underwriting each others’ debts (Beck, 1998). These exchanges
took place within political and business strata smaller and more tight-knit
than Japan’s; moreover, as Khan (2002: 480) notes, given the weakness of
civil society there was no need to share the spoils with ‘‘intermediary
classes,’’ as was the case for many of the business-political networks
of South Asia.
The resulting Elite Cartel was a device of political control. Chaebol
leaders who did not ‘‘contribute’’ – or, later on, those who showed signs of
political independence – not only had to seek credit on the far more
expensive ‘‘curb market,’’ but also found themselves targets for hostile
and arbitrary bureaucratic and legal proceedings. Business failure was a
real possibility for those who fell out of favor. Whether by calculation or as
a byproduct of political control and predictability – there is disagreement
on this point – elite networks built partly on corruption also proved very
effective at producing economic growth (Woo, 1991). Park rewarded
development ‘‘winners,’’ making productivity and export growth important
criteria for admission to the cartel.
Corruption at work: major cases
During his presidency Park Chung Hee raised large sums for his
Democratic Republican Party’s operations and vote-buying (estimated
to have cost $40 million in the 1967 campaign). DRP officials cultivated