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Reference ID: 09SEOUL498
Created: 2009-03-29 22:25
Released: 2011-08-30 01:44
Classification: CONFIDENTIAL
Origin: Embassy Seoul
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P 292225Z MAR 09
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC PRIORITY 3802
INFO RUEHBJ/AMEMBASSY BEIJING 5533
RUEHMO/AMEMBASSY MOSCOW 9427
RUEHKO/AMEMBASSY TOKYO 5627
RUEHIN/AIT TAIPEI 3106
RHHMUNA/CDR USPACOM HONOLULU HI
RUALSFJ/COMUSJAPAN YOKOTA AB JA
RUACAAA/COMUSKOREA INTEL SEOUL KOR
RHMFISS/COMUSKOREA J5 SEOUL KOR
RHMFISS/COMUSKOREA SCJS SEOUL KOR
RHEHNSC/NSC WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC//OSD/ISA/EAP//
C O N F I D E N T I A L SEOUL 000498
SIPDIS
E.O. 12958: DECL: 03/27/2019
TAGS: KS KN PGOV PREL
SUBJECT: BIG NAMES IMPLICATED IN UNFOLDING BIPARTISAN
BRIBERY SCANDAL
Classified By: POL Joseph Y. Yun. Reasons 1.4 (b,d).
1. (C) SUMMARY: Korea's latest political corruption scandal,
slowly growing for months, picked up speed this week with the
arrest of Democratic Party (DP) lawmaker Lee Kwang-jae and
summonses issued for a number of politicians including Grand
National Party (GNP) lawmaker Park Jin. The allegations
revolve around a Busan businessman, Park Yeon-cha, and his
alleged illegal campaign contributions and bribes to some of
Korea's most powerful politicians and tax and law enforcement
officials. At first the investigation appeared to be focused
on politicians close to former President Roh Moo-hyun, but
the scope of the investigation has expanded to as many as 70
politicians from both sides of the political divide,
including some close to President Lee Myung-bak. How
culpable many of the accused -- including Foreign Affairs
Committee Chair Park Jin -- are remains unclear, but these
allegations will not soon be put to rest and will likely
unsettle the National Assembly -- and Korean politics -- for
some time. END SUMMARY.
-----------------------------
Background Notes on a Scandal
-----------------------------
2. (SBU) The scandal started in the summer of 2008 with a
tax probe into Busan-based shoe manufacturer Taekwang
Industrial and its Chairman Park Yeon-cha, who made his
fortune by supplying athletic shoes to Nike. In July, tax
investigators raided Park's office and confiscated
confidential documents and account books. One of Park's
secretaries provided details on his meetings, telephone
conversations, and secret deals with some of the country's
most influential men. Also uncovered was a document
recording a loan of 1.5 billion Korean won from Park to
former President Roh Moo-hyun. In November the National Tax
Service handed the case over to prosecutors, asking that Park
be indicted for tax evasion and insider trading.
-----------------------
Progressives Fall First
-----------------------
3. (SBU) As the investigation progressed, aides to former
president Roh Moo-hyun were implicated, and Park is now
believed to have been one of Roh's major financial sponsors;
the two men hail from Busan and have been close associate for
decades. On March 25, prosecutors arrested Roh's former Vice
Minister of Public Administration Chang In-tae for allegedly
taking 800 million won (USD 587,251) in illegal political
funds from Park for Chang's 2004 South Gyeongsang Province
gubernatorial bid. Park claimed that Roh's elder brother,
Roh Gun-pyeong (also under arrest), called Park to request
assistance with Chang's campaign. On March 23 Roh's former
Senior Secretary for Civil Affairs Park Jung-kyu was detained
for questioning and later placed under arrest for accepting
100 million won (USD 73,421) in gift certificates while
working for President Roh. Other progressive politicians
under investigation include:
--Lee Kwang-jae, DP lawmaker with close ties to Roh Moo-hyun,
detained for receiving illegal political funds worth over 200
million won (USD 146,842);
--Suh Gap-won, DP representative and Senior Vice-Floor
Leader, alleged to have received tens of thousands of dollars
in illicit funds;
--Choi Cheol-kook, DP lawmaker, alleged to have received
illicit funds;
--Kim Hyuck-kyu, former South Gyeongsang governor;
--Lee Jeong-wook, former Korea Maritime Institute head,
detained for receiving illicit funds.
-----------------------------
Conservatives Far From Immune
-----------------------------
4. (C) What originally seemed like a probe targeting only
the progressives, soon included allegations directed at a
number of high-profile GNP politicians. Most notably was the
prosecutors' summons on March 26 of Park Jin, GNP
Representative and Chair of the Foreign Affairs, Trade and
Unification (FATU) Committee. Park Jin's Chief of Staff
(COS) confirmed on March 27 that the prosecutor's office had
summoned Park Jin for questioning with regard to the
unfolding bribery scandal. Park's COS told poloff that the
allegations against Park Jin were unfounded, and the COS was
confident that Park Jin had nothing to worry about. The FATU
Committee's COS said he spoke to Park Jin March 27 and
described him as angry at being summoned for questioning but
resolute in denying involvement in the scandal.
Representative Park apparently plans to file defamation
charges. The FATU COS was, nevertheless, concerned by the
potential for the scandal to ensnare the committee's chairman.
5. (SBU) Also on March 26, prosecutors announced that they
were investigating former GNP lawmaker and current Ambassador
to Japan Kwon Chul-hyeon. Kwon served three terms
representing Busan, and is known to be a strong supporter of
President Lee. Cho Boo-kil, a former public relations
secretary for both President Lee and his older brother,
Representative Lee Sang-deuk, was arrested on charges of
taking money from Park and for trying to halt the tax probe
into Park's company. Other conservative politicians under
investigation include:
--Huh Tae-yeol, GNP Representative, alleged to have received
illicit funds;
--Kwon Kyung-seok, GNP Representative, alleged to have
received illicit funds;
--Song Eun-bok, former Gimhae Mayor, detained for receiving
illicit funds.
----------------
Busan Connection
----------------
6. (C) The scandal primarily involves politicians grounded
in South Gyeongsang Province and Busan, but an unconfirmed
news report claims the investigation is targeting as many as
70 people, including several former and incumbent
prosecutors. An aide to GNP Representative Chung Doo-hwan
told poloffs that everyone in Busan, regardless of party
affiliation, is involved in this scandal. In fact, the
contact noted, Park was more tied to the conservatives, but
supported Roh and the DP when it was in power until last
year. Overseas locations are also involved, and prosecutors
allege that many politicians -- including Park Jin and Lee
Kwang-jae -- accepted money through a New York restaurateur.
Some politicians are alleged to have also received funds in
Vietnam.
-----------------------------
Political Motivation Unlikely
-----------------------------
7. (C) Speculation is swirling about possible political
motivations for the investigation. The DP has claimed that
the probe is part of a Blue House effort to eradicate pro-Roh
elements of the opposition. These allegations have failed to
gain momentum, however, as prosecutors began to implicate
conservative politicians. Some within the GNP think the Blue
House is trying to undermine supporters of the President's
conservative rival Park Geun-hye and claim that both Lee
Sang-deuk and Kim Young-ho also received money but are not
being investigated because of their close ties to the
administration. With the number and range of politicians
involved, however, it is doubtful that any one party or
faction will emerge from this scandal unscathed.
-------
Comment
-------
8. (C) Korean politics is no stranger to corruption, but the
Park Yeon-cha scandal is the largest and most wide-ranging in
quite some time. One politician -- Lee Kwang-jae -- has
already fallen victim and more are sure to follow. While it
is likely the probe started with former President Roh's
aides, it is also likely that nobody, not even the Blue
House, could control the investigation once it was underway.
Now that it is the top news story, prosecutors are forced to
follow through and the Blue House cannot appear to be
intervening. Undoubtedly, the scandal will dominate the next
National Assembly session set to start on April 2. In fact,
between the scandal and the upcoming by-elections -- not to
mention ongoing discussions about media reform and KORUS FTA
-- it is difficult to see how politicians will find the time
to focus on legislation.
STEPHENS
WWeek 2015