CORRUPTION Syndromes of Corruption

Elite Cartels 109
his presidency (1981–87). Contributions from chaebols and other sources
ran as high as $1.2 billion, with Chun retaining $270 million; some of the
proceeds went to buy off opposition figures. Those refusing to play
Chun’s game were punished: the Kukche conglomerate, whose chairman
balked at demands for large contributions, had its credit effectively cut
off, went into bankruptcy, and was sold off piece-by-piece to others who
had met their political assessments. ‘‘Contributions’’ were demanded for
the New Village Movement, the Illhae Foundation, and the 1988
Olympics. By Chun’s time, however, the chaebols had more leverage
since continued growth depended upon their success. Thus, while
Chun made some moves to clean up chaebol business practices, his
initiatives served as more of a disciplinary threat than as real reform
(Pye, 1997: 220; Moran, 1998: 171; Moran, 1999: 575; Blechinger,
2000: 4; Steinberg, 2000: 207; Schopf, 2001: 698–708; Kang, 2002a:
96, 2002b: 187–188; Kim Joongi, 2002: 175–177).
Hanbo Steel, a middling chaebol at most, had economic – and therefore,
political – ambitions, and it too paid a major price. In 1992 it contributed
130 billion won to Kim Young-Sam’s presidential campaign, winning
major favors including permission to build one of the world’s largest
steel mills. Hanbo’s relatively modest assets would have made it difficult
to borrow the needed $6 billion had it not continued to buy influence,
spreading over $6 million among legislators, bankers, and officials in
Kim’s administration. Delays raised the cost of construction, however,
and by 1996 lenders began to withhold credit; in 1997 Hanbo declared
bankruptcy. Investigations uncovered bribery and business irregularities
and revealed that Kim Young Sam’s youngest son, Kim Hyung-Chul,
was taking substantial bribes. The son was sentenced to prison (though
later released as a part of an amnesty), a profound embarrassment to the
President. The Hanbo episode was a turning point of sorts: it destroyed
Kim Young-Sam’s reformer image, proved that chaebols could collapse,
and also showed that democracy by itself was no barrier to corruption. If
anything, Hanbo’s bribery in the National Assembly showed that democratization
could increase the number of figures whose support had to be
bought and their appetite for funds (Blechinger, 2000: 4–5; Schopf,
2001: 709–712; Moon and Kim, 2000: 153–154).
The Alsthom case illustrated the role of regional loyalties in the operation
of Elite Cartels. Over the years Kyongsang province, in southeastern
Korea, has been a privileged place: many top political, bureaucratic, and
economic figures hail from there, and they have looked after each other and
the folks at home. It was no surprise when Seoul announced in the
1990s that the nation’s first high-speed rail project would link the capital
with Pusan, one of Kyongsang’s major cities. Five rounds of bidding left a